Major global oil companies have been investing in the petrochemical sector, as they expect the industry could support oil and gas sales growth in the coming decades. Unfortunately, the coronavirus pandemic threatens economic growth and demand in Asian, African and Latin American markets in a time when the plastic industry is facing bans on disposable items that have been implemented in many parts of the world.
The pandemic provided a near-term boost in demand for protective suits, face masks, and takeaway food containers. Plastic resin prices have been decreasing over the last two years, with the pandemic putting another heavy pressure recently and challenging hundreds of billions of dollars investments in petrochemical expansion since the 2010s.
With many oil majors slashing capex, some petrochemical projects, including ones under construction, are facing deferrals. Dow Inc said in April it would idle three polyethylene (PE) production facilities in the US. The partnership between South Korea’s Daelim and Thailand’s PTT delayed the FID indefinitely for a $5.7 billion petrochemical project in Ohio. Shell’s massive plastic project in Pennsylvania is also facing an oversupply and a low price outlook.
However, 176 new petrochemical plants are expected to enter service over the next five years. ExxonMobil, Shell, and domestic petrochemical companies have kicked out the construction of their massive projects in China.
