Fast Market Research recommends "Saudi Arabia Petrochemicals Report Q1 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 03/06/2013 -- The Q113 Saudi Arabia petrochemicals report looks at the future of the industry in the context of turbulent export markets and rising feedstock costs. We also examine attempts to diversify the production portfolio and whether this will be sufficient to overcome the aforementioned challenges. The report will also consider the ways in which trends in Asian markets will affect strategic decision-making as demand growth slows and global over-capacity threatens some segments.
Concerns over rapid capacity growth continue to mount due to plunging profitability as product prices have declined and softening demand in Asia has hit operating rates. Although ethylene prices declined 9%, the fall in feed costs, which was felt along the value chain, was insufficient to offset the decline in sales. BMI has been warning for some time that overcapacity could become a problem in the short term, but that in the long term petrochemicals demand will grow faster than domestic capacity expansion, meaning there will be a need for imports.
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This has been reflected in fluctuating product prices, although the trend has been negative. Over the shortterm, the Asian petrochemicals industry will be constrained by the weak global economy. The main risk is regional over-supply as production is ramped up at a time of slower demand growth. The focus in coming years will be on developing high-performance and specialty grades, which can add value to exports and put the Saudi industry in direct competition with Japanese producers and other more mature markets.
- There was a surge in petrochemicals capacities in 2012, led by the start-up of operations at the Saudi Polymers Company, which has added capacities of 1.17mn tonnes per annum (tpa) ethylene, 445,000tpa propylene, 1.1mn tpa polyethylene (PE), 400,000tpa polypropylene (PP), 200,000tpa polystyrene (PS) and 100,000tpa hexane-1.
- The Asian petrochemicals market will be crucial to Saudi Arabia's growth and profitability going into 2013. Uncertainty has increased due to the volatility because of the eurozone crisis and plant restarts in Asia.
- By 2017, BMI forecasts ethylene and propylene capacities will rise to 19.52mn tpa and 7.0mn tpa respectively, with Saudi Kayan's commercial operations set to account for most of that increase. Total PE capacity will rise to 9.28mn tpa by 2017, PP will increase to 5.60mn tpa, PS will reach 375,000 tpa, and PVC will remain unchanged at 855,000tpa.
- In BMI's Middle Eastern Petrochemicals Risk/Reward Ratings (RRRs), Saudi Arabia is rated as the most attractive country by some margin, with a score of 77.7 points. The country is placed ahead of the UAE, which is in second place with 64.2 points, up 0.5 points and narrowing the gap slightly, and a cluster of other Gulf countries that cannot compete with Saudi Arabia's feedstock or economies of scale. It is also ahead of Iran, which suffers from poor risk levels.
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