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Petrochemical revenues to become less volatile, says McKinsey & Co.

Oil&Gas Materials 15 May 2021 10:12
Petrochemical revenues to become less volatile, says McKinsey & Co.

BAKU, Azerbaijan, May 15

By Leman Zeynalova – Trend:

As the price of oil increases to more than $60 per barrel (Brent) and GDP continues to recover after the initial shocks of COVID-19, petrochemical revenues will become less volatile, making incredible drops, such as those seen in 2020, increasingly unlikely, Trend reports citing McKinsey & Co.

“On this point, regional cost advantages will resume as cost curves become steeper, and the steady recovery of indexes are expected across regions and end markets, supporting a more even recovery of volume across all types of chemicals. While some bans on single-use plastic packaging were lifted during the pandemic for hygiene concerns, the acceleration of sustainability and recycling is expected to continue, as we see more commitment from consumer packaged goods and chemical companies as well as government pushes, such as the EU levy on unrecycled plastic packaging. However, a new wave of capacity is expected to come online in 2021 and beyond. Integrated margins for PE or PP may compress for marginal producers, primarily in Asia. More than nine million tonnes per annum additional ethylene capacity is coming online in 2021, outpacing the expected demand growth. Regarding PE and PP, regional price differences may once again become consistent with the past as the disruptions in production and freight are resolved,” said the company.

Mckinsey & Co. noted that the world has changed dramatically in the past 12 months, and many industries were forced to adapt.

“The petrochemicals industry was no exception. Petrochemical producers have played a major role in helping society with the challenges of the pandemic. As an industry, it has transitioned into 2021 strongly, and we are seeing strong profitability. Petrochemical players should use the current good times to get ready for a new and exciting future, one that combines the power of petrochemical products and solutions within a business context. This vision entails producers that embrace a sustainability agenda, including climate change mitigation, to help further transition to a more circular model for plastics.”

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Follow the author on Twitter: @Lyaman_Zeyn

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