The chemical industry continues to grow at rates higher than general economic growth and the outlook remains positive, said Neil Chapman, president, ExxonMobil Chemical in his wide-ranging keynote address to the Asia Petrochemical Industry Conference (APIC) in Sapporo, Japan today.
“I believe that we are witnessing a new golden age for chemicals manufacturing and innovation. Demand for energy and chemicals remains robust, and we expect continued growth in the decades ahead,” Chapman said.
ExxonMobil estimates that global demand for chemicals will rise by nearly 45% over the next decade alone, or about 4%/year. Nearly all of this growth will occur in the developing world, with two-thirds coming from the Asia/Pacific region. Some of the growth will be from the expanding global middle class. “We expect that India and China will each reach more than 1 billion middle-class citizens by 2040.” The industry is responding to these demographic trends by expanding investments across the value chain, he said.
Much of the investment in manufacturing is occurring in Asia/Pacific where the demand is. But companies are also investing in regions close to affordable and abundant feedstock supplies. “The current situation in the United States is playing out similarly to what occurred in the Middle East decades ago, when the region emerged as a low-cost supplier due to competitive feedstock. As a result of the shale gas revolution, that feedstock advantage is shifting toward the US, where companies, including ExxonMobil, have announced a wave of capacity expansions to serve growth overseas.” The shale revolution in the US has sparked a manufacturing renaissance, particularly for chemicals.
Petrochemical producers in Asia are voicing concerns about the scale of expansion in North America, which will target Asia, particularly about the so called second-wave of investments. Responding to CW’s question on this subject, Chapman said that he does not agree with the concept of first or second waves. “I think it will be a continuous progress. Some of the announcements that have been made for new projects, are not likely to be built to the same scale or time.” He concedes that demand for chemicals in the United States and in North America is not growing at the same speed so these products will have to be exported to the developing or emerging economies where the growth is. “The US will be an increasing exporter but there will still be plenty of investment where the markets are growing,” he said.
Touching on environmental issues, Chapman said the industry must take action to reduce the environmental footprint of its operations. “At ExxonMobil, our chemicals business has reduced its net greenhouse gas emissions intensity by 9% since 2013. We have also reduced the energy intensity of our manufacturing operations by 4% over the past decade. Other companies in the industry have achieved similar success…But, there are other responsibilities that extend well beyond our facilities, including doing our part to reduce the negative impacts from the products we produce. The challenges of waste management will continue to increase and we, the chemical manufacturers, must play a leadership role in identifying long-term solutions.
Chapman outlined some of ExxonMobil’s investment. The company, capitalizing on the US shale revolution and the resulting supplies of competitive feedstock and energy, recently announced plans to invest $20 billion into manufacturing facilities along the US Gulf Coast. The majority of the new capacity will be for the production of performance polyethylene, targeted for export to the growth regions of Asia, Africa and Latin America, Chapman said. ExxonMobil is also growing its manufacturing presence in Asia to keep pace with growing demands and evolving customer needs. “We recently completed a multibillion dollar expansion of our chemical complex in Singapore, which doubled the size of its finished product capacity. We are further upgrading our Singapore specialty products by adding halobutyl rubber and adhesive resin manufacturing facilities, which are scheduled to be completed with start-up in the second half of this year. And earlier this month, we reached an agreement to acquire the assets of Jurong Aromatics Corp. in Singapore. These facilities present strategic product and logistical synergies for ExxonMobil’s integrated refining and petrochemicals complex.” The company is also expanding the Shanghai technology center.
By Natasha Alperowicz
Source: Chemical Week
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