New Energy research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/18/2013 -- The Q213 Algeria petrochemicals report examines how delays to petrochemicals projects are affecting the petrochemicals business environment and the prospect of downstream diversification. It also assesses the impact of new government legislation on investment, particularly the upstream sectors, which are crucial to securing competitive feedstock for the petrochemicals industry. In this report we also look at Algeria's search for new petrochemicals markets and warn that the country faces tough competition from strong Middle Eastern and new Asian industries, as it looks to emerging markets and developing economies to generate business.
Algeria has focused on low added-value production, relying on commodity chemicals that are highly price responsive to market fluctuations and easily undermined by capacity elsewhere in the world. The industry is some distance from competing on equal terms with European petrochemicals producers in terms of product diversification. As such, it will be vulnerable to market fluctuations in the narrow range of products it produces, although the effects on margins should be cushioned by the local availability of competitively priced feedstock.
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Overall, the petrochemicals market will undergo a period of massive change over the next decade as unconventional shale and gas reserves are produced, which will alter the dynamics at play within the market. Given the vast reserves thought to be available in Algeria, the impact of these hydrocarbons resources cannot be underestimated.
However, delays to current projects indicate that the realisation of the country's full potential in petrochemicals is unlikely over the forecast period. These delays will not only raise costs and lead to a narrowing of margins in the long term, they will also create a more opaque business environment that will undermine progress and put the industry's significant cost advantages - in terms of domestic natural gas feedstock availability - at risk.
Over the last quarter BMI has revised the following forecasts/views:
- The main development in H113 is the planned commencement of operations at Sorfert Algeria's fertiliser plant, which will produce around 800,000 tonnes per annum (tpa) of merchant ammonia and 1.2mn tpa of urea for export. Mechanical works were completed at the beginning of 2013, but production was stalled due to delays in government
- The Algerian government set out a US$80bn five-year investment budget in 2012, a US$12bn increase on previous plans as a result of investment in the country's unconventional gas reserves. This will have an inevitable knock-on effect on the petrochemicals industry, not only because there will be more gas available for feedstock, but also because Sonatrach will have more money to invest in revamping and boosting its petrochemicals industries.
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