The Pentane Market is forecast to reach $150 million by 2025, growing at a CAGR of 3.8% during 2020-2025. The rising demand for solvents in the paints & coatings industry is fueling the demand for pentane. Also, the growing demand for polystyrene is fueling the consumption of pentane as a blowing agent.
- Asia-Pacific dominates the pentane market owing to increasing demand from solvent applications in the paint industry coupled with several applications in the plastics industry.
- The n-Pentane segment held the highest share in the segment by type. This was due to the rising traction for the segment as a fuel in the developed countries of North America and Europe.
- The blowing agent segment held the major share in the application segment. There is rising demand for this application in the polystyrene industry.
By Type – Segment Analysis
Pentanes are used as blowing agent in the production of polyurethane foams. The foam is applied to insulation in household and commercial appliances, reefers and cooling containers, in the construction area as boards and panels, in pipes and similar applications. N-pentanes also have a high demand as a blowing agent in the polystyrene industry. In the past, capacity utilization of polystyrene plants averaged at only about 75%. This resulted in a considerable reduction of capacities and restructuring undertaken by manufacturers. Industrialized countries have responded to the excess capacities by reducing production volume and refocusing on growth markets. In order to satisfy the rising global demand, however, production capacity has to increase again. Global capacity is scheduled to be expanded by 700,000 tonnes until 2020. More than 90% of these new capacities will be created in Asia-Pacific. This is fueling the demand for pentanes in the industry.
Geography – Segment Analysis
APAC dominated the pentane market with a share of more than 32%, followed by North America and Europe. The economy of APAC is mainly influenced by the economic dynamics of countries such as China and India, but with growing foreign direct investment for economic development of South East Asia, the current scenario is changing. Apart from natural heavy crude, pentane plus is also as an additive for other oil mixes for smooth and easy pipeline transportation. Emerging economies such as India, China, Vietnam, Taiwan, and South Korea are expected to witness high gasoline demand over the forecast period. North America was a leading global player for pentane as a fuel as the U.S. has established as a major pentane plus exporter. Shale gas plays in the region has increased natural gas liquid production which has resulted into high pentane plus production regionally.
China has the largest automotive industry in the world and one of the largest civilian aircraft markets. According to OICA, China held 35 percent share in global passenger cars sales in 2017. India also has excellent potential for automotive industry growth in the future. The country’s automotive industry experienced 8% growth in production in 2018, over the previous year. With more than 11 million vehicles traveling on the U.S. roads, which is 11.5 percent of the total vehicles in the world as reported by the OICA in 2017, there will be tremendous demand for pentane as a fuel in the automotive application.
Drivers – Pentane Market
- Demand as an Alternate fuel
By the end of 2018, global cumulative installed PV capacity reached about 512 gigawatts (GW), of which about 180 GW were utility-scale plants. This represented a growth of 27% from 2017. Although capacity additions remained flat in 2018, solar PV generation increased 31% in 2018, and represented the largest absolute generation growth (+136 TWh) of all renewable technologies, slightly ahead of wind and hydropower. This is fueling the demand for pentane.
Challenges – Pentane Market
- Volatile crude oil prices
In the second half of 2018, the oil market exhibited high volatility not only in terms of price levels but also time spreads and quality spreads. After reaching highs of $81/b and $71/b in October, monthly Brent and WTI prices ended the year in December at $57/b and $49/b respectively. At the same time, time spreads switched from backwardation to contango, as inventories rose above their 5-year average and the prospects for global demand worsened amid supplies increasing. The spreads between light sweet-medium sour crude also exhibited wide volatility, with the Brent-Dubai and WTI-Dubai spreads collapsing signaling a shortage of heavier sour crude globally.
- Growing demand for battery electric vehicles
The shift towards electric vehicles in the developed and developing nations would hamper the growth the pentane market over the forecast period. According to IEA, Norway, the Netherlands and Japan are frontrunners in the electronic vehicles segment. Norway held the share of 46 percent in terms of the global new electric car sales as reported by IEA in 2018. In order to meet zero emission targets under the “Paris Climate Accord”, in 2017, France government has announced that it will ban diesel and gasoline-powered vehicles completely and switch to electric powered vehicles by 2040.
Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Pentane market. In 2018, the top five players accounted for xx% of the share. Major players in the Pentane Market are Exxon Mobil Corporation, Hcs Group, Ineos Group Holding S A, Maruzen Petrochemical Co , Ltd, Phillips 66 Company, Royal Dutch Shell Plc, Sk Innovation Co , Ltd, among others.
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