Baku, Azerbaijan, July 22
By Leman Zeynalova – Trend:
Oil demand growth in the coming decades will be reliant on increasing consumption of petrochemicals largely driven by increases in the use of plastics, Trend reports citing Fitch Solutions Macro Research (a unit of Fitch Group).
Petrochemical’s current share of global oil demand is roughly 13mn b/d or 14 percent of total demand according to the IEA.
Forecasts from OPEC expect total oil demand growth to 2040 of 14.5mnb/d of which they forecast petrochemicals set to increase 4.5mnb/d by 2040 or nearly 30 percent of global growth. The IEA forecasts to 2030 have petrochemical demand adding an additional 3.2mn b/d which is broadly in line with OPEC estimates, which extend for an additional decade.
“Most notably, petrochemicals are the largest contributor to oil demand growth, followed by road transportation at 4.1mnb/d according to OPEC. A large driver of the new demand for petrochemicals will be the expanding middle class who will begin to consume more plastics as their affluence grows.
Fertilizer is another large user of petrochemicals but growth rates will increase broadly in line with global GDP at rates which are forecast to be much lower than that for plastics. Plastics account for roughly half of the petrochemical output, with single-use plastic making up one-third of total global production of roughly 350mn tonnes per annum in 2017,” reads the report released by Fitch Solutions.
Per capita consumption of plastics is expected to increase to 60 kg per capita in 2050 from 47kg per capita in 2017 according the IEA, with no plateau expected.
“The narrative from OPEC and the IEA on the expected demographic impacts dictate increased
petrochemicals demand tied to the consumption of plastic and rise of the middle class. Without significant changes in consumer behaviour in emerging markets we can expect the per capita rates globally to increase. Emerging markets are set to impact demand more than OECD countries due to the low base of per capita consumption in emerging markets and the impacts of recycling and legislation limiting consumption in the OECD,” said the company.
The report shows that plastic consumption in China and India will account for the bulk of new petrochemical demand as demographic forces take shape.
“The proportion of petrochemicals in crude demand growth will be significant but risks to an earlier peak in crude demand are possible as legislation and consumer behaviour begin to take shape as sustainability gains more prominence. Net growth in oil demand will be heavily dependent on Chinese and Indian consumption for all uses of crude with 22.2mnb/d of demand coming from developing countries lead by China and India compared to a decline of 8.7mnb/d from OECD countries according to OPEC,” said the report.
The importance of Chinese consumption of plastics to global demand is evident today as much higher volumes are consumed there than any other country, according to the company.
The 2017 IEA figures put China nearly four times higher than the next highest consumer for petrochemicals, the US.
“This is not expected to abate in the coming decades. India is a distant fifth in consumption but has a faster population growth rate than China which should increase petrochemical demand substantially as the Indian economy matures and expands.”
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