Exploring the Latest Trends in Crude Oil Demand and Polymer Market

Crude, the main element in the global energy market, has experienced significant changes in recent times. These sudden changes are affecting the polymer segment performance. Keep reading to understand what are these changes, their driving factors, and their impact on polymer pricing and its global demand.

Global Crude Oil Demand Surges

Global crude oil demand experienced a notable surge, rising by 1.5 million barrels per day (bpd) yearly to 100 million bpd in Q1 2024. This rise is mainly due to increased demand from  America and Asia.

Jet fuel and kerosene oil emerged as main drivers in demand growth, witnessing a robust increase of approx 0.70 million bpd yearly. The demand for gasoline saw a growth of 0.15 million bpd, while that for diesel grew by 0.25 million bpd annually.

Influential Factors Affecting Crude Prices

Brent crude oil prices averaged US$83-83.5 a barrel during this period, marking a US$2 increase compared to the previous year. The positive demand trend was further fuelled by ongoing voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), along with reduced Russian production due to geopolitical factors.

Despite challenges such as tanker constraints caused by the Red Sea crisis, the global crude oil market maintained its upward trajectory, underscoring the resilience of the industry amidst adversities.

Polymer Segment Performance

The polymer segment witnessed a decline in prices driven by sluggish global demand and fluctuations in feedstock energy prices. Notably, polypropylene (PP) prices declined by 10%, polyethylene (PE) too by 10%, and polyvinyl chloride (PVC) by nearly 20%.

Key feedstock prices also experienced a downturn, with US ethane prices dropping by 48% and the Singapore naphtha price declining by 11%, on a yearly basis. Similarly, the price of Ethylene Dichloride (EDC) decreased by 20%  annually.

Margin Analysis of Polymer Market

Polymer margins faced pressure, declining by 8% to 20% annually. Despite this, domestic polymer demand showcased resilience, experiencing a notable improvement of 14% on a year-on-year basis.

The domestic polymer market witnessed heightened demand from various sectors, including agrochemicals, retail and FMCG packaging, pharmaceuticals, automotive, and infrastructure. Reliance Industries Limited (RIL) continued to uphold its dominant position in the domestic polymer market, supported by a robust supply chain network and superior customer service.

OFB’s Insight on Crude Oil and the Polymer Market as a Whole

As we reflect on the trends observed in the global crude oil demand and polymer segment performance, it is evident that the market continues to evolve amidst various challenges and opportunities. Stakeholders in the energy and polymer industries have to keep them updated with regard to geopolitical events and understand the current market landscape to reduce the risk as much as possible.

Get latest polymers news, market updates, and price trends on OfBusiness