Horizontal Integration of Petrochemical Industries

Petrochemical economics depend strongly upon the feedstock valuation. This is especially true since the petrochemical industry is, in general, capital intensive and the cost of raw material is extremely important in the final manufacturing cost. 

Petroleum and natural gas derivatives can be attributed values thal may vastly differ depending upon the local market distribution of various fractions, transportation or pipeline costs, other feedstock availability, other infrastructure for manufacturing, and the effects of taxation and import duties. 

The first approach is normally referred to as vertical integration, while the second approach is often called horizontal integration. Both vertical and horizontal integration approaches have been vital factors in restructuring and stream-lining modem chemical industries. 

From the standpoints of vertical and horizontal integration of chemical manufacturing industries, it is of crucial importance to understand that there are certain chemicals which are used in preparation of a large family of other chemicals possessing diverse functions and properties. In petrochemical or organic chemical industries, the following seven building blocks are frequently used  

Many chemicals can be made from two or more building blocks. For example, styrene can be made from two building blocks of ethylene and aromatic hydrocarbons. 

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