German industrial orders surge on autos Plastic use to drive oil demand
BERLIN — German industrial orders rebounded in August as an auto sector bottleneck cleared and deals with customers outside Europe picked up sharply, and the economy ministry said manufacturing should power ahead in the fourth quarter.
Contracts for German goods rose by 2.0 per cent after a fall of 0.9 per cent in the previous month, the ministry said yesterday. A Reuters poll of analysts had predicted a rise of 0.5 per cent in August.
“The strong increase in orders from non-European countries proves that German industrial products remain in demand worldwide, regardless of trade conflicts,” the ministry said in a statement.
It said the rise was helped by a clearing bottleneck in the auto sector that had stemmed from the introduction of a new pollution standard – the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) – for which some German car models needed to gain regulatory clearance.
With that hurdle overcome, “the positive economic trend in the industrial sector should resume in the fourth quarter,” the ministry said.
Yesterday’s stronger-than-expected data followed a solid business confidence reading from Europe’s largest economy last week.
The Ifo economic institute’s survey showed business morale held steady in Germany in September, propped up by consumer spending and construction, pointing to further growth even if a uncertain global economic outlook worsened.
“We don’t need to worry about the German economy, even if in 2018 it looks like there will be a slower rate of growth than originally expected,” said Thomas Gitzel, economist at VP bank.
The government has forecast 2.3 per cent growth this year and 2.1 per cent for 2019. — REUTERS LONDON — Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said yesterday.
Despite government efforts to cut pollution and carbon emissions from oil and gas, the Parisbased agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products.
Petrochemicals that are derived from oil and gas feedstocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives.
Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report.
“The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come,” IEA Executive Director Fatih Birol told Reuters.
Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world’s
Contracts for German goods rose by 2.0 per cent after a fall of 0.9 per cent in the previous month, the ministry said on Friday. A Reuters poll of analysts had predicted a rise of 0.5 per cent in August.
Global demand for petrochemical feedstock accounted for 12 million barrels per day (bpd), or roughly 12 per cent of total demand for oil in 2017. The figure is forecast to grow to almost 18 million bpd in 2050.
Most demand growth will take place in the Middle East and China where big petrochemical plants are being built.
Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics.
Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single use plastic bags.
But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth.
“Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption,” it said.
Under the IEA’s most aggressive scenario, recycling could hit around 5 per cent of high-value chemical demand.
Petrochemical plants mainly run on light oil products such as naphtha and liquefied petroleum gas (LPG).
But natural gas is becoming an increasingly favoured feedstock, particularly in the United States where shale gas production has risen. — REUTERS
Plastics and other petrochemical products will drive global oil demand to 2050. — Photo unenvironment.org