New Energy research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 09/09/2013 -- The UAE petrochemicals industry is continuing on its drive towards increased capacity and diversification, but BMI warns that it will have to deal with increasing competitive pressure on crucial export markets, as China and India ramp up production and developed markets remain in the doldrums. China will be the principal source of sales for the UAE petrochemicals industry in the long term, with polyolefins consumption set to reach 60mn tonnes by 2020, almost double the level reached in 2012. As a result, by the end of the decade the country could account for around 60% of Asian demand. However, the ability of UAE producers to profit from that will depend on whether Chinese producers are able to take advantage of low-cost coal resources as feedstock in coal-to-methanol production for use in the petrochemicals chain. These resources have the ability to compete effectively against Middle Eastern petrochemicals, but plant construction is more expensive and coal resources are located far from the main markets within China. If the UAE is able to maintain the competitive cost of its olefins production, it will be able to sustain its presence in Asia.
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The retail sector is likely to drive consumption of plastics in the UAE. Although consumer products will largely be imported, retail drives plastic packaging, providing a boost to polyethylene (PE), polypropylene (PP) and polyethylene terephthalate (PET) segments. Construction is expected to show steady growth.
Dubai has seen a steady recovery in the property market throughout 2012, with villa prices rising by more than 20%. Adding to that, according to the UAE's President, HH Sheikh Khalifa bin Zayed al-Nahyan, the UAE is set to start a massive housing project, replacing 12,500 houses build before 1990, at a cost of US $2.7bn. This should stimulate consumption in polyvinyl chloride (PVC). Altogether, the UAE should witness broad-based growth in polymer plastics.
- In the short term, the export market is challenging and UAE producers will feel the squeeze of moderating economic activity in Europe and Asia and the continuing growth in capacity in emerging markets.
- In the midst of this slowdown caused by increased Asian self-sufficiency, Borouge is pressing ahead with the expansion of its petrochemical facility at Ruwais, which is expected to deliver products to the market in Q114. Borouge 3 will add capacities of 1.5mn tonnes per annum (tpa) ethylene, 960,000tpa PP and 1.08mn tpa PE. The project also includes an 80,000tpa cross-linked polyethylene (XLPE) plant, which Borouge said will be a value-added complement to the 350,000tpa low-density polyethylene (LDPE) unit at the site. Unless external markets recover, the additional capacity will exacerbate the problems faced in 2013.
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