Fast Market Research recommends "United Arab Emirates Petrochemicals Report Q2 2013" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 06/07/2013 --BMI View: 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.

Borouge reopened its polyolefins facilities at Ruwais, Abu Dhabi in mid-February 2013 following a planned six-week maintenance turnaround. The company said the turnarounds were used to increase the production of value-added grades, such as ready-made pressure pipe compounds for the infrastructure market. The turnarounds, which coincided with an uptick in increased Asian purchases, contributed to a rise in PE and PP prices of around US$80-130 per tonne in January. Although Borouge was back to full capacity in February, maintenance stoppages elsewhere in the GCC should continue to support prices in going into April.

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Over the last quarter BMI has revised the following forecasts/views:

- UAE exporters will increasingly feel the squeeze of moderating economic activity in Europe and Asia and the continuing growth in capacity in emerging markets. In China, demand for finished products has dwindled, affected in part by slowing domestic household consumption as well as falling EU exports. India had served to plug the slump in Chinese demand growth, but with Indian polymers capacities expected to leap and Chinese imports declining, UAE production will face growing market constraints and with it narrowing margins.
- 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 product to the market in Q114. Borouge 3 will add capacities of 1.5mn tpa ethylene, 960,000tpa PP and 1.08mn tpa PE. The project also includes an 80,000tpa XLPE plant, which Borouge said will be a value-added complement to the 350,000tpa LDPE unit at the site. Unless external markets recover, the additional capacity will exacerbate the problems faced in 2013.
- 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 PE, PP and PET segments. Construction is expected to show steady growth. This should stimulate consumption in PVC. Altogether, the UAE should witness broad-based growth in polymer plastics.

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