The chemical industry will be the fastest growing sector in the Middle East over the next three years, as businesses try to remain competitive by refocusing onto higher-value and niche products, a new analysis by research firm IHS suggests.

Global market conditions for the refining and petrochemical industries have significantly changed over the past few years, driven by the U.S. shale energy revolution that has pushed North American feedstock prices down and forced producers elsewhere to rethink their strategies.

But the new market situation seems to be helping Middle East petrochemical and refining companies in encouraging them to strive for innovation and invest in new technology, the analysis said. These trends will allow the region to further strengthen its position on the global chemical and petrochemical market, thanks to diversified portfolios and higher-value production. According to Dave Witte, general manager of IHS Chemical and senior vice president at IHS, such transitions are not uncommon for mature markets and present excellent business opportunities for chemical businesses in the Middle East to tap into new territories.

As a result, Middle East businesses will be able to build on exports, with China predicted to be the main consumer of petrochemicals and chemicals from the region. Total exports for the industry are projected to grow by eight percent annually through to 2016. This will turn the industry into the fastest-growing in the area, outpacing oil and gas, transportation, banking and automotive, IHS commented.