APIC ’10: Asia petchem leaders cautious on industry outlook

14 May 2010 09:58  [Source: ICIS news]

By William Lemos

MUMBAI (ICIS news)--Asia petrochemical leaders gathered in Mumbai were cautious about the industry outlook, saying on Friday that continued growth in Asia will be accompanied by supply pressure from the Middle East and environmental regulation challenges.

“Global warming will be increasingly important,” said Kenji Fujiyoshi, chairman of the Japan Petrochemical Industry Association (JPCA), while urging the industry to consider ways of improving energy effectiveness through reusable energy.

The industry should also consider technologies to improve naphtha-cracking methods, and the development of substitutes for fossil fuels, he said at the 2010 Asia Petrochemical Industry Conference (APIC) in Mumbai.

Fujiyoshi, along with other Asian industry leaders, stressed how future carbon regulations would likely change the way the petrochemicals industry operated and the type of products it would be required to offer in the years ahead.

“The carbon issue” and “carbon footprint” have been buzzwords, said a representative from Malaysia, while an official from Singapore called climate change “a major challenge” for an energy intensive industry such as petrochemicals.

Aside from environmental concerns, industry leaders pointed to the low-cost capacity emerging in the Middle East as a factor that would increase competition in the global market, and added that it would likely weigh on Asian petrochemicals.

According to industry projections, ethylene-capacity expansion in the Middle East totalled 8m tonnes/year in 2008–2009, while another 4m tonnes/year is expected to come online in 2010.

Asia will also see a massive expansion of capacity in 2010 with output rising by 7m tonnes/year.

The setback on demand growth coupled with new capacities brings continuous challenges to profitability, a Singaporean industry official said, predicting that Asian producers would have to continue tackling costs aggressively.

“The industry cannot afford to be complacent,” said KG Ramanathan, president of the Chemicals and Petrochemicals Manufacturers' Association (CPMA) of India.

The 2010 APIC conference, which ends later on Friday, was attended by more than 1,300 delegates from 40 countries.

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By: William Lemos
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