Middle East exports to pressure Europe, US

12 February 1998 12:50  [Source: ICIS news]

LONDON (CNI)--Middle East petrochemical exports could increase pressure on Europe and the US, because of a likely downturn in Asian demand, consultants Chem Systems predicted Thursday.

In a paper prepared for the Chem Systems annual European seminar here, managing director John Philpot said the Middle East's powerful competitive advantages would continue well into the future.

Middle East petrochemicals capacity is growing rapidly. By 2000 the region will have around 8m tonne/year of ethylene capacity, from less than 500 000 tonne/year in 1980. Global capacity share would be around 8% for ethylene and polyethylene, and 20% in ethylene glycol, Philpot predicted.

The region's cheap feedstocks underlie the Middle East's success. Cheap finance is still available in Saudi Arabia for up to half of a project's value, Philpot said, while tax incentives are "universally good." Meanwhile, tariff reductions would continue to improve the attractiveness of Middle Eastern exports, and improvements in gas conversion technologies could lead to a future "new wave" of petrochemical investment, he said.

"Many western and Asian companies have found it appropriate to include Middle Eastern joint ventures as part of their continuing global sourcing strategies beyond 2000," Philpot said. "Any downturn in Asian imports, such as seems likely to result from current turmoil, will greatly increase pressure on Europe and the US."

By: Grace Williams
+44 208 652 3214

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