Boston, MA -- (SBWIRE) -- 02/04/2013 -- BMI's latest UAE petrochemicals report examines the impact of turnarounds at the Abu Dhabi Polymers (Borouge) complex on Gulf polymers prices over the short-term. It also monitors the latest developments in petrochemicals production in Abu Dhabi and assesses whether planned investment in downstream capacity will be sufficient to overcome the constraints created by the current lack of product diversification and dependence on commodity chemical exports.

Borouge planned to shut its polyolefins facilities at Ruwais, Abu Dhabi for maintenance in Q412 and Q113. This would bring 600,000 tonnes per annum (tpa) of polyethylene (PE) capacity offline in December 2012 followed by 540,000tpa high density polyethylene (HDPE) and 800,000tpa polypropylene (PP) withdrawn from production in February 2013. The turnarounds are being used to increase the production of value-added grades, but will temporarily tighten the polymer market as Borouge withdraws from the spot market. However, the effects of Borouge's shut-downs could be mitigated by the start of full operations at facilities in Saudi Arabia and Qatar. Nevertheless, the restriction in Gulf Cooperation Council (GCC) supply from Borouge should help support prices and therefore defend margins going into 2013.

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Going forward, the UAE's petrochemicals industry will benefit from the rapid expansion of capacities in highly integrated, state-of-the-art complexes but will be limited by the narrow product range and lack of downstream diversification. These include Borouge 3, which is expected onstream in mid-2014, and the first stage of Chemaweyaat's complex, Tacaamol, which is due onstream by 2016.

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

- BMI expects ethylene capacity of 5mn tpa in the UAE, up from an estimated 2mn tpa in 2011, with PE more than tripling to 3.52mn tpa and PP rising by nearly 170% to 2.14mn tpa over the period.
- In BMI's Middle Eastern petrochemicals business environment ratings matrix, the UAE has a score of 64.2 points, unchanged since the previous quarter. This quarter, the UAE remains in second place, 3.4 points ahead of Kuwait and 13.5 points behind regional leader Saudi Arabia.

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