EPCA ’09: SAfrica petchems face tough future despite recovery

05 October 2009 17:30  [Source: ICIS news]

BERLIN (ICIS news)--Smaller petrochemicals companies in South Africa will continue to struggle in future despite some “claw back” due to lack of integration, smaller feedstock base and rising electricity rates, an industry executive said on Monday.

The country has registered some growth in the fourth quarter with the economy set to post stronger gains next year, but that recovery would not translate into a push for the petrochemicals industry, said Mark Holtes, commercial director of Isegen South Africa Pvt Ltd, on the side lines of the 43rd European Petrochemicals Association (EPCA) meeting.

“We will probably see some 7 to 8% claw back [growth of petroehcmical companies],” Holtes told ICIS news, adding that only Sasol, South Africa's petrochemical major, would continue with robust growth.

“The rest of the industry will always suffer,” he said, adding that “some small players may even have to shut down”.

Holtes blamed that on a variety of factors, including lack of integration within the industry, absence of a large feedstock base to support growth and major increases in electricity charges motivated by bringing power rates to a par with international prices to encourage investment in the sector.

Holtes said the utility authorities in the country had asked the government to agree to massive hikes in electricity charges to bring them in line with the world prices.

“Power charges will likely double, about 40% increase in 2009…after they managed an increase of 25% last year [2008],” he added.

Isegen manufactures food acidulants, phthalic and maleic anhydrides (PA and MA), and plasticisers in South Africa. Its has three manufacturing sites; at  Isipingo and Umgeni – both situated in Durban - and the third at Germiston near Johannesburg.

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By: Tahir Ikram
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