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Helping petrochemical companies navigate a changing industry landscape and build their businesses for the future.

The competitive dynamics of the global petrochemical industry—the chemical industry's largest subsector—are changing. To make the right strategic decisions, companies must understand the industry's shifting dynamics, as well as overall trends in demand growth and sources of cost advantage.

In the last ten years alone, we have helped petrochemical companies and integrated oil companies on more than 300 strategic and tactical projects around the world. Working closely with McKinsey's Oil & Gas practice and experts in our organization's functional practices, the Petrochemicals group advises clients on a variety of challenges in five key areas: strategy, organization, operations, capital productivity, and marketing and sales.

Examples of our work

  • We helped a major petrochemicals player design and implement a long-term plan for geographic expansion. By identifying its competitive advantages and product expertise, and screening out lower-value growth ideas, the company was able to quickly double its market cap—and has identified substantial additional upside potential.
  • We worked with a major oil player on its efforts to merge four geographically and administratively disparate business units within its petrochemical division into a single, cohesive organization. Within six months, the client had launched the first wave of the merger, finalized its new supply-chain planning processes, and mapped all non-production processes for the new organization.
  • We advised a petrochemical company in Eastern Europe that had identified marketing and sales as a major performance improvement lever. By working with 40 client team members across sales, marketing, and production, we helped the company analyze its pricing behavior, ultimately identifying 60 specific actions that would offer $130 million in bottom-line improvement in one year. We also helped the client create a pricing committee, and design new roles within the marketing group.
  • We helped a large petrochemical company increase EBITDA in preparation for the IPO of one of its subsidiaries. Together with the client, we conducted a series of site diagnostics and then, based on a blueprint of operational best practices, identified more than $500 million in operational opportunities through fixed-cost reductions, variable-cost reductions, and contributions to margin increases.

Featured capabilities

While many organizations rely on a few publically available forecasts—which are often incorrect or based on assumptions that are not fully transparent—we use a scenario-based approach to planning. This approach helps companies identify the conditions under which their strategies will be most successful, and the likelihood that those conditions will become reality. In the process, clients get a better understanding of the key drivers of their success. Scenario-based planning requires detailed insights about how prices are linked along different parts of a value chain, across multiple value chains, and across regions. We deliver these insights using a distinct set of proprietary tools:

  • Our Margin Analysis Models calculate historical and outlook cash margins for individual petrochemicals, allowing us to compare the relative attractiveness among routes, across regions, and across time, and to assess the impacts of changes in pricing mechanisms.
  • Our proprietary Cost Curve and Trade Optimization Tool helps clients estimate how their prices and profit margins will be affected by factors such as demand changes, capacity additions, cost shifts, and specific producer actions.
  • Our proprietary Price Outlook Linkage Model uses various hydrocarbon price and chemical chain margin scenarios to derive micro-economically consistent petrochemical price sets, which we then use as input for scenario-based market planning.
  • Our End-use Market Mix Chemicals Database helps us evaluate client exposure to possible economic changes—for individual business units or the entire organization.

Featured experts

Thomas Hundertmark

Senior Partner, Houston

Jakob Fischer

Senior Partner, Munich

Marco Ziegler

Senior Partner, Zurich

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