| The world petrochemical industry is faced with an overcapacity in traditionally producing areas such as the United States, Western Europe, and Japan. At the same time, an increasing amount of new capacities are either planned or almost completed in energy-rich regions such as Canada, Latin America, Eastern Europe, the Middle East and Africa, and the Far East and Oceania. Such a conflicting move may add significantly to the existing problems of the world petrochemical industry.;Based on this theoretical model for the world petrochemical industry, both a static and a dynamic model are developed. The static model covers nine regions, thirty-one products, and a five-year period, 1988 to 1992, while the dynamic model includes eight regions, eleven products, and three five-year periods, 1988 to 2002.;A variety of different cases are examined including one in which product demand is decreased. Two other cases which are considered are (1) stricter import policies by traditional producers and (2) adjustment in base-year capacity to include possible new productive units added before 1988.;Both the static and dynamic models forecast an increasing role for light hydrocarbon feedstocks in world petrochemical production. The energy-rich regions such as the Middle East and Africa, Latin America, Canada, Eastern Europe, and the Far East and Oceania are projected to increase their share of total world primary petrochemicals capacity from 53 percent to 66 percent between 1984 and 2000. These regions concentrate heavily on the production of natural gas-based products such as ethylene, methanol, and ammonia. In terms of capacity expansion, Western Europe and Japan do less well than the United States. Stricter import policies can decrease some of the capacity losses by these traditional producers. Finally, the addition of most capacity to the energy-rich nations is more sensitive to an increase in investment expenditures than to an increase in feedstock prices in these energy-rich regions.;A multi-period, multi-region, multi-product, multi-process linear programming model is developed to analyze investment decisions under selected scenarios. Embodied in the model are detailed technical information about processes and products as well as economic information on different regions. |
