Europe chemical industry looks into Asia growth

04 September 2007 10:12  [Source: ICIS news]

FRANKFURT (ICIS news)--Asian chemical markets were on the agenda in Frankfurt on Tuesday as industry representatives including the German chemical industry association (VCI) met delegates from across Europe and Asia.

The Chemicals in Asia conference, organised by the European Chemical Marketing and Strategy Association ECMSA, was discussing how European producers could benefit from growth, while looking at the risks and challenges involved in investing in these emerging economies.

Huge economic growth in Asia has been met by a surge both in demand and production of chemicals, especially in China, South Korea and India.

The three are among the 10 countries with the highest foreign exchange reserves globally while the latter two are seeing a boom in consumers’ income.

However none of these countries has significant oil and gas reserves, with China expected to import 60% of its crude oil by 2020, said Simon Jones of consulting firm KPMG.

While India was unlikely to catch up with China, Jones said, China’s petrochemicals focus would be exposed to much larger risks including possible economic downturns in industrialised regions and disturbances in oil and gas supplies from the Middle East.

China’s chemical industry has been growing by over 10% per year but would rely on exports for some time to maintain GDP growth.

“China has, at least on paper, the ingredients to emulate South Korea, but can the world economy sustain Chinese growth?” said Jones.

He added that Chinese firms were not spending sufficient funds on research and development (R&D), risking the sustainability of their industry and preventing a move into value-added downstream chemicals.

South Korea faced different challenges. After a period of strong sustained growth, Korean petrochemical players were suffering from the shift of capacities to China and higher oil and gas prices, said Jones.

India, although developed in a number of specialty chemicals markets, would need to add 60m tonnes/year of ethylene capacity by 2012 to meet polymer demand.

The conference runs from 3-4 September in Frankfurt, Germany.

By: Mark Watts
+44 20 8652 3214

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