PETROCHEMICAL INDUSTRY MOVES BACK TO USASeptember 04, 2014 News
Seattle, WA (September 4, 2014) TRI’s Global Manager speaks on the Petrochemical industry.
Almost three decades ago, North America was the petrochemical industry leader and the predominant supplier of many key raw materials into growing regions such as Asia, the Far East and Japan along with the traditional markets of Europe. Over the span of the next few years, we see that history is about to repeat its course and has already started to create an impact. I believe this will be marked as an historical event for the USA petrochemical Industry. Along with this, comes the shift of reshuffling major economies worldwide; producers are battling it out to keep costs down and their plants running at profitable rates, as the ever growing competitiveness, plant expansions and new plant builds in the USA grow.
The traditional supply routes will be dissolved and new trade partnerships will be built out across the globe with new economic leaders taking center stage. The most important factor to understand is that when the Middle East started oil production many decades ago, it was mostly for the export market. This was due to their limited internal consumption domestically, however, it will be the complete opposite for the USA. This will be mostly due to the fact that US produced oil, will be consumed domestically and only the excess volumes will be exported most likely to Europe. The race will of course be, getting there first with the world’s most competitive supply chains out of USA!
What will happen over the next few years?
We believe that Houston will emerge as the world’s petrochemical hub. This will serve the USA well, building out a greater understanding of the North American culture and its petrochemical industry. It will not be without challenges, as until we get the North American refineries up and running, we could have very unbalanced market with unsettled ramifications across many groups of products. We are also building and developing new infrastructure to facilitate the volume and expected growth to handle the export operations in North America. This will create the need for the expansion of the Panama Canal along with better ocean freight rates out of USA, and the need for economical drumming options. This is a potential threat many are not yet prepared for, this is not going to be an easy transition, albeit exciting!
Revival of manufacturing sector in USA.
This will hopefully in-turn boost the revival of the manufacturing sector in the USA. There of course is the flipside, where although it makes sense to move your operations closer to a cheaper energy source, it could mean that most of the USA based production will be consumed by a growing manufacturing industry domestically, with limited volumes for export. This in turn, might create market shortages internationally, as oil production may not remain stable in many OPEC countries due to continued unrest in several Middle Eastern countries.
Content provided by Waheeb R. Malik, General Manager, UAE, TRInternational Middle East.
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