Diversity, cost control key for Mid-East chem firms

13 December 2007 09:01  [Source: ICIS news]

DUBAI (ICIS news)--Diversity and costs control will be key to the Middle East sustaining its competitive advantage in the petrochemicals market, senior industry officials said on Thursday.

 

“We have to introduce new types of projects. The concept of more the same should disappear… the market has changed,” said Hamad Al-Terkait, president and CEO of Equate Petrochemical, the joint venture between Dow Chemical Co and Kuwait's Petrochemical Industries Co.

 

He was speaking at the three-day 2nd Gulf Petrochemical and Chemical Association (GPCA) which ends on 13 December.

 

Worldwide GDP is growing at 2-3% globally, with most of the growth coming from emerging markets like India which saw 8% growth last year, he said.

 

“People have money to spend, and this will be a civilised type of consumption like plastics,” Al-Terkait said.

 

“We want to have high-added value projects and we hope that more of these projects will come up,” he said.

 

On whether taking on specialties chemicals projects would mean stepping on the toes of present customers, Heinz Haller, executive vice president of Dow Chemical's performance plastics and chemicals division, said: “We're taking the same course as the rest of the world. We're basically replacing imports with locally produced products.”

 

Meanwhile, Middle East firms would also have to look at new geographies to market, said Al-Terkait.

 

“We also need a diverse marketing strategy. We have to think of Africa… [It's] going to be a huge opportunity. Projects being built in Africa are leading to an increase in consumption,” said Al-Terkait.

 

Petrochemical companies in the region should also look at controlling fixed costs such as logistic, he said.

 

“For all of us, distribution costs exceed 40% of total costs,” he said, adding that this leaves little room for variable margins after adding other fixed costs.

 

“Logistics costs can't be controlled, but we have to look for ways to optimise the supply chain model,”  he said.

By: Jeanne Lim
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