Petrochemical Producers Face Uphill Climb as Overcapacity Bites
Survival of the fittest
Petrochemical producers in Europe and Asia are facing an uphill battle as years of overcapacity in China, the world's largest market, continue to weigh on the industry.
Major producers in both regions are being forced to sell assets and shut down plants in order to survive. According to a recent report by McKinsey & Company, the global petrochemical industry is expected to lose $20 billion in 2020 due to overcapacity.
The problem is particularly acute in Asia, where a flood of new capacity from China has driven down prices and squeezed margins. In Europe, the situation is compounded by the region's high energy costs.
In order to survive, petrochemical producers are focusing on three key strategies: reducing costs, increasing efficiency, and expanding into new markets.
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