The global trend lines for the petrochemical industry may be pointing toward some mergers and acquisitions between key regions and some exits from the business, a consultant from Nexant Asia told a key Asian industry gathering on Thursday.
Those that may leave the business in the coming years will those who cannot find a competitive advantage in key areas, such as low-cost feedstocks, economies of scale and locations near markets with supply deficits, Andrew Spiers, senior vice president of Nexant Asia, said during a presentation to APIC, the Asia Petrochemical Industry Conference, in the Malysian capital Kuala Lumpur.
Companies that are likely to excel will focus on integrated refining and petchems models, such as ExxonMobil, those with global businesses, such as Dow and BASF, or those that focus on maximizing cracking value, such as LyondellBasell, he said.
Aside from those types of focus, then "we'll get some people who choose to exit the business," Spiers said. As a result, 20 years from now the petrochemicals industry will look very different that it does today, he said.
As for regional trends, the growing net imports of ethylene equivalent by China and the low-cost ethane available for Saudi Arabia could make for further combinations, he said.
"This is building greater interdependence between the Middle East and Asia, with further implications for global investment," Spiers said. This dynamic "will be larger in the future and I think it will result" in mergers and acquisition activities, he added.
While the petrochemical industry will remain cyclical in nature, it continues to see new patterns emerge, Spiers said. For instance, with the expansion of shale gas and oil production in the US, "now people are talking about the US conceivably being a net petroleum exporter."
