Factors Driving Monoethylene Glycol Market
By: Sonam Roy
Market drivers are the positive factors that are expected to promote and push the growth of the industry, also are the factors responsible for the development of the new market. Market drivers play key role in formulating the business strategy to increase their revenue with the overall growth of the industry.
Some of the key drivers of MEG market are:
*Increasing production of Polyester
The major factor that is driving the growth of Monoethylene Glycol market is the rising demand of Polyester fibres from the global textile industry. About 0.345 Kg of MEG is used to make 1 Kg of Polyester. The production of Polyester fibres in the past years has been increasing. This increasing trend will also be noticed in the coming years. The production of Polyester fibre will grow by 5-6% over the forecast period i.e. by 2020. This growth is anticipated, owing to growing worldwide demand of apparels, home furnishings, yarns, and ropes.
The major application of MEG is in production of Polyester, thus the MEG market is directly related to Polyester market. The positive future outlook of Polyester market will boost the market for MEG in near future.
Asia has been the major producer of Polyester fibre in the World and is forecast to continue to remain so in near future. The Asian Polyester fibre production is projected to grow at the highest CAGR of 6.0% from 2015 to 2020. Asia has the highest market share of 92.7% in global production of Polyester fibre for year 2014. Thus, Asia would have highest consumption as well as demand for MEG. In order, to fulfill this demand majority of manufacturers are expanding their production capacities in Asia by following both organic as well as inorganic growth strategies.
The production of Polyester fibre in the Middle East is projected to grow at a CAGR of 3.4% from 2015 to 2020. The primary reason for this growth is that the production of Paraxylene is already significant in Middle East, but PTA and PET Resin are a more recent phenomenon and are growing fast, stimulated by the recognition that it is easier to obtain overall profitability in the Polyester chain with full vertical integration. The fast-growing nature of economies in the region also means that growth in domestic demand, for chemicals generally and PET packaging resin specifically, is very attractive. This strong demand growth is supplemented by robust export markets, which the Middle East is well placed to serve. The growing market of Polyester in the Middle East will be indeed an opportunity for MEG manufacturers to gain higher market share.
Due to its chemical properties like high viscosity, low freezing point, and high boiling point MEG is widely used in the manufacture of coolants and antifreeze materials. Number of vehicles on road is increasing globally and is projected to grow by a CAGR of 4.9% from 2015 to 2020. This growth in vehicle on-road volumes can be attributed to growing vehicle production and sales volume and increasing average life of vehicles, due to technological innovations. The growing vehicle on-road volumes will drive the demand of coolants and antifreeze. Increase in demand of coolants and antifreeze will indeed fuel the demand for MEG. The automotive sector in emerging economies of Asia Pacific and South America is estimated to grow at higher rate, owing to rising demand for vehicles, urbanization, growing export, and cheap labor in these regions. Thus, these regions are forecast to have higher demand of MEG as compared to others.
Rapid growth and changing lifestyle of consumers in emerging economies like India, China, Brazil and Mexico has been driving the packaging industry which in turn is expected to provide push to Monoethylene Glycol market over the forecast period. Growing usage of Polyethylene Terephthalate (PET) in several consumer good products like food containers and bottles due to better strength and impact resistance is estimated to boost demand for Monoethylene Glycol over the next seven years. Packaging industry has been growing at a rate of 3-5% per annum globally. The size of the packaging industry worldwide, excluding machinery was $600 billion in 2014. PET bottles and Jars have made a remarkable entry into the Indian market, with annual growth rate of 20% per annum. The demand for a new range of plastic closures has also emerged replacing metal closures. The factors affecting growth of packaging Industry in India are urbanization, growing Indian economy, increasing health consciousness and changing food habits among Indians, and rural marketing pushing demand for sachets.
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