Petrochemical
Demand from the petrochemical sector is expected to increase to 2040
By then, petrochemical feedstock demand is expected to represent a fifth of the demand barrel, rising by just under 6 million bpd from current levels.
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Petrochemical - Summary
Rising populations and incomes in developing economies are driving ever greater demand for plastics
But there is limited scope for sustainable technologies to play a role in the market for the foreseeable future.
By 2040, petrochemical feedstock demand is expected to represent a fifth of the demand barrel, rising by just under 6 million bpd from current levels.
It is anticipated that petrochemical feedstock demand will rise significantly in Asia by over 3 million bpd to account for 45% of global feedstock consumption. It is also expected to rise in North America and the Middle East, with just under 2 million bpd of additional demand from these regions by 2040. New investment for petrochemical facilities has been highest in these three regions with projects strategically located to capture cheap feedstock and market share. Asia in particular, has various large projects soon to come online which will increase overall capacity significantly.
The use of plastics is embedded in almost every aspect of modern life; it has transformed consumption and supported economic activity; playing a key role in progress, from advances in communication technology through to medical innovation. The drive to reduce consumption of this useful and ubiquitous material is based largely on the desire to limit its environmental impact, both its emissions from the use of petroleum-based feedstock, and also the challenge of its disposal.
Progress in recycling technology will increase capacity, but not to the scale required to significantly impact petrochemical feedstock demand before 2040, when recycled plastics will most likely still represent a relatively small share of total plastic use at an expected 14% of the market.
Petrochemical feedstock demand by region
Petrochemical feedstock demand is expected to continue to grow and will become an increasingly important part of the barrel.
Rest of World includes South America, Africa and FSU
Shaded section indicates timing of COVID-19 pandemic
Petrochemical feedstock includes ethane, propane, butane and other liquids. Coal and methanol are not included.
Petrochemical - Key drivers
The market for bio-based plastics is expected to continue to lag behind
Although supply has increased, they still represented less than 1% of plastics produced in 2022. Higher costs of production, quality concerns, challenges in the supply of biological feedstocks and timeframes to upscale production are likely to limit their adoption over the forecast horizon.
Despite the biodegradability of certain bio-based plastics, most present the same disposal challenge as conventional plastics. Somewhat counterintuitively, the adoption of bio-based plastics increases the complexity and cost of sorting which could negatively impact recycling.
Although small, higher-income consumers choosing sustainable substitutes may drive some reduction in demand for petroleum-derived plastics. However, health concerns, particularly as the effects of micro-plastics are better understood, could result in a global consumer shift especially within the food and drink industry.
The overriding trend within the petrochemical sector is anticipated to be increasing demand from developing economies. Rising incomes will support a growing market for goods and services that improve living standards and for technology that promotes economic opportunity. Consumers in these regions are expected to largely prioritise cost over sustainability; only when alternative solutions are available at cost parity and at scale, is adoption likely to accelerate.
Petrochemical - Case study
Creating a circular plastics system
Vitol has recently acquired WPU Waste Plastic Upcycling, a company which upcycles end-of-life plastic waste to oil.
Using batch pyrolysis technology, the end product is used as a petrochemical feedstock in the production of recycled plastics. Chemical recycling is a critical pathway for the EU to achieve its circular plastics targets by 2030 and beyond. It also has the potential to be used in the road transport fuel and sustainable aviation fuel (SAF) markets.
Based in Denmark, WPU has an operational commercial plant capable of recycling 25,000 tonnes of waste plastic a year – the equivalent of approximately five hundred million plastic bottles. Plans for a second plant with improved efficiency and capacity are underway.
Disclaimer
The Long term oil demand outlook report includes Vitol’s views on and forecasts of both historical levels and projections of future energy demand, supply, and trends based upon internal data and analyses as well as publicly available information from a variety of external sources. The report contains forward looking statements, including projections, targets, expectations, estimates and assumptions of future behaviours. Actual future conditions and results (including energy demand, energy supply, the growth of energy demand and supply, the impact of new technologies, the relative mix of energy across sources, economic sectors and geographic regions, imports and exports of energy, emissions and plans to reduce emissions) could differ materially due to changes in economic conditions, the ability to scale new technologies on a cost-effective basis, unexpected technological developments, the development of new supply sources, changes in law or government policy, political events, demographic changes, trade patterns, the development and enforcement of global, regional or national mandates, changes in consumer preferences, and various other factors. The report was published in February 2025. Vitol assumes no duty to update these statements or materials as of any future date, and neither future distribution of this material nor the continued availability of this material in archive form on our website should be deemed to constitute an update or re-affirmation of this material as of any future date. This material is not to be used or reproduced without the permission of Vitol. All rights reserved.