Chemical value chain
The global petrochemical industry has recently experienced a serious disruption in the supply and price of major chemical raw materials such as ethylene, propylene, butadiene and benzene, due to the change of raw material mix used in petrochemical production. With the surge of shale gas production in the United States, the supply of ethylene has also increased significantly. At the same time, the supply of propylene, butadiene and benzene decreased. As a result, the price of ethylene is decoupled from that of propylene, benzene, and especially butadiene, which are more expensive than ethylene. Looking ahead, natural gas development in Iraq and China may further distort supply and prices.
"Special" production technologies for propylene, butadiene and benzene have existed or are being developed. Until recently, these technologies were considered marginal economically, but they are becoming increasingly attractive. In fact, technologies intended to produce propylene and benzene should correct the current supply imbalance and reduce prices in the short to medium term. This does not apply to butadiene, whose intentional production is still marginal and expensive and may distort prices for the foreseeable future.
These developments affect all participants in the chemical value chain: global producers, GCC 1 producers and consumers. Global producers have significant new growth opportunities in areas where raw materials can be used for point production. Most of these manufacturers invest in process technology, but now they have to consider product technology, R & D strategy and the way they play a role in this market. GCC companies will need to recognize that, without a favorable supply of raw materials, intentional production in the region will be unattractive or insignificant. GCC will need to enhance their existing capabilities and look for new areas where raw materials can be used for site production. Finally, customers need to make reverse integration a top priority to ensure supply security and price stability.
