The chemicals sector shows steady demand growth
with significant downside potential

Final energy consumption

Million TJ

In the short to medium term, the chemicals market will grow more strongly than GDP

Historical steady growth rates in petrochemicals have been higher than GDP growth

The growth of petrochemicals is expected to continue to be above GDP until 2030

Plastics recycling rates are currently low but will pick up in the medium to long term

Due to technological and logistical challenges, current recycling rates are low

A significant uptake of the recycling rate post-2030 is expected to decelerate oil demand growth

We expect a number of disruptors

Recycling, demand reduction, bio-based alternatives, and process and efficiency improvements might fundamentally reshape the future of the petrochemical sector and thereby offset the expected growth

Implications for the sector

Chemicals has historically been regarded as a sector with strong fundamentals, but what will happen in the long term?

Oil industry

Oil demand growth will remain strong in the short to medium term, but growth will decelerate post-2030. However, chemicals’ share of global oil demand may almost double by 2050 compared to today

Chemical industry

Plastics recycling and packaging trends will determine future oil demand in chemicals. This will mainly be driven by regulatory measures, but industry players have shown themselves willing to set voluntary recycling targets

Gas industry

Gas demand in chemicals will show continued growth until 2050. This is driven by strong fundamentals for ammonia and methanol. On the fuel side, the electrification of low- and medium-temperature heat will increase in select regions, while high temperature heat is expected to remain uneconomical

To watch in the next 5 years

Changes in the chemicals sector will be driven by supply-side dynamics as well as demand-side regulation

Shale gas

Ethane is one of the by-products of gas production. The US shale revolution has led to an increasing market share of cheap ethane as a feedstock for ethylene production, which is leading to an interest in on-purpose technologies for the production of propylene

The circular economy

Substitution, recycling, and waste management have received a lot of public attention. A regulatory push for recycling, the development of better sorting schemes, and a reduction in quality problems with recycled material will impact demand for virgin material

China

China is experiencing a huge surge in CTO/MTO technology (producing methanol/olefins from coal), leading to a spectacular growth in methanol demand. At the same time, China has ambitious targets for switching from coal to gas consumption in the chemicals sector

Chemicals will drive ~55% of total liquids demand growth between 2020-2030

Energy demand for chemicals globally will be twice as big in 2050 as in 2015

Tipping points

Governments will intervene as plastic waste becomes a public health focus and carbon abatement is required to achieve climate targets.

Regulation might spark demand reduction and recycling uptake

- Current plastic waste threatens global ecosystems
- Regulators are starting to show resistance to the use of certain plastics (e.g., plastic bag bans) and waste dumping. They will push back on industry and consumers alike to increase recycling and generate more efficient production routes

Best available technology (BAT) can lead to savings of 30% in fuel consumption

- Energy savings continue to be made across the sector
- The installation of BAT can lead to 30% savings in the sector, differentiated across regions

Model

Our chemicals model projects fuel and feedstock demand across the main chemical value chains. It includes country-level projections of petrochemicals and key derivatives, as well as ammonia and methanol, two primary chemical outputs. The balance of the market is captured in a holistic chemical demand model.


Global Energy Perspective 2018

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