1. Why Petrochemical Shortages Happen Even When Production Grows

On the surface, it seems contradictory:
Worldwide petrochemical capacity increases every year… yet many products still experience periodic or chronic shortages.

This happens because supply and demand never expand at the same speed.

Several factors cause this mismatch:

1. Demand sometimes grows faster than capacity

Consumer markets — especially in China, India, Africa, and Southeast Asia — expand rapidly.
For example, a 1% rise in GDP can increase polymer demand by 1.5–2%.

2. Refineries and crackers have long investment cycles

A new ethylene cracker takes 3–5 years to build.
Demand can surge in 6 months.
This lag ensures that shortages can appear even when investment is active.

3. Products tied to crude oil volatility stay unstable

Aromatics (BTX), MEG, Methanol, and polyolefins react quickly to:

• Crude oil movements

• Naphtha feedstock tightness

• Regional gas supply changes

Frequent volatility means frequent shortages.

4. Planned and unplanned shutdowns

Maintenance outages in:

• South Korea

• Saudi Arabia

• China

• Europe

immediately reduce export availability.

2. The Role of Geopolitics and Trade Restrictions in Supply Tightness

Geopolitical tensions create artificial shortages.

Examples include:

• Sanctions restricting exports

• Import tariffs reducing trade flow

• Shipping route disruptions (Red Sea, Panama Canal)

• Regional conflicts affecting ports

These disruptions make supply unreliable, especially for products such as:

• PE100, MEG, LDPE, Methanol, PA, and solvents

• Aromatics that depend heavily on global trade routes

• Products shipped mainly from the Middle East

In some cases, the product exists — but cannot reach the buyer.

This creates a perceived shortage, which increases prices.

3. Feedstock Constraints: The Hidden Root of Many Shortages

Some petrochemicals depend entirely on limited feedstocks.
Example:

• MEG → relies on ethylene supply

• PVC → depends on chlorine availability

• PP → tied to propylene supply

• Aromatics → tied to naphtha availability

If any feedstock becomes tight, the finished product shortage becomes unavoidable.

This is why shortages often occur across multiple products simultaneously.

 Table 1 — Petrochemicals Most Prone to Global Shortage

4. Shipping and Logistics: The Modern Driver of Imbalance

Even when production is stable, logistics can create shortages.

Major factors include:

• Container shortages

• Increased freight rates

• Port congestion

• Slow vessel turnaround

• Red Sea and Panama Canal disruptions

• Shortage of tankers for chemicals

These issues increase delivery time, forcing buyers to switch suppliers — which intensifies tightness in certain regions.

Example

A shutdown at a single port in Saudi Arabia can delay MEG and polymer shipments to China, immediately tightening Asian supply.

 Table 2 — How Logistics Problems Create Artificial Shortages

5. Why Asian and African Demand Makes Shortages Worse

Asia accounts for over 55% of global petrochemical consumption.
Africa has the fastest-growing demand for polymers and solvents.

When these markets grow faster than expected:

• Import dependency increases

• Supplier competition intensifies

• Stockpiles shrink quickly

• Shortages become more frequent

Products heavily impacted by Asian demand surges:

• MEG

• HDPE/LDPE

• PP

• Methanol

• Aromatics

• Solvents (Solvesso, toluene, xylene)

6. Are Some Shortages Permanent?

Yes — some shortages are structural and will not disappear soon.

These include:

1. Aromatics shortage

Naphtha crackers are being replaced by gas-based crackers, reducing BTX output.

2. PVC fluctuations

Construction markets remain unpredictable and highly seasonal.

3. PP tightness

Propylene supply is increasingly unstable due to refinery transitions.

4. MEG supply shifts

China’s coal-to-MEG investments have not fully solved structural tightness.