Global Automotive Growth Spurs Demand for Fuels & Petrochemicals

In addition to low gasoline and diesel prices, global new car sales from China to the U.S. has spurred gasoline and diesel demand.

China’s 91 cars per 1,000 people is a large reason for petrochemicals growth.

The European automotive industry association ACEA’s monthly new car registration statistics have shown a year-on-year increase in each of the past 28 months and a 9.3% jump in total 2015 registrations compared with 2014. That includes a record year for the UK industry, where 2.63 million new cars were registered, beating the previous high of 2.58 million in 2003.

That growth will likely continue, albeit at a slower rate. ACEA expects an increase of around 2% to roughly 14 million units in 2016. Overall European new registrations of 13,739,921 in 2015 remained well below the peak of almost 16 million in 2007, but with GDP growing and unemployment shrinking to a four year low in the European area, it creates a recipe for increased discretionary spending.

The U.S. broke a 15-year old record in 2015, selling 17.47 million cars. Growth there is expected to continue solidly. Merrill Lynch forecasts increased new car sales over the next three years to a peak of 20 million in 2018, as the growing U.S. economy allows consumers to flock to new models coming onto the market.  The National Automobile Dealers Association (NADA) predicts a record year in 2016 but a decline thereafter as used car prices fall on increased supply. But it still expects new car sales to remain at or above 16.8 million units per year until 2019, comfortably above the average of the past ten years.

Passenger car sales in China grew by 7.3% year-on-year to 21 million 2015 according to industry association CAAM. The slowing of economic growth in China is a concern but the level of motorization; 91 cars per 1,000 people in China compared with 564 per 1,000 in the EU, according to ACEA figures, leaves plenty of room for growth to support sales.

Along with higher sales numbers developed by Argus media consultants, stricter emissions guidelines are encouraging manufacturers to use more plastic materials in cars to make them lighter and more fuel efficient.  Material distribution varies between models, but industry consultant FKA estimates that between 250 kg and 360 kg of plastic are used in a conventional vehicle, of which over 20% are polyolefins. The proportion of plastics in cars is likely to increase over time as environmental legislation governing CO₂ emissions becomes increasingly stringent. The combination of sales numbers and light-weighting has led several large European polymer manufacturers to invest in automotive plastics.

French energy giant Total bought German automotive plastic compounder Polyblend in 2015, as well as building two new polypropylene compounding lines of its own at its Carling petrochemical site, an investment which it described as complementary to its focus on the automotive industry.