17 May 2010 09:57 [Source: ICIS news]
By Mahua Chakravarty
MUMBAI (ICIS news)--The start up of new benzene and paraxylene (PX) plants and strong demand for toluene will maintain aromatics growth at 7-10% for India and at 2-4% in the Middle East through 2010, an industry executive said late on Friday.
“The happy story [about the Middle East] is that volumes are growing, margins are healthy,” said Yogesh Mehta, managing director of distribution company Petrochem, referring to the start up of new plants producing benzene and PX in Oman and Kuwait since 2009.
New downstream styrene monomer (SM) plants in Kuwait and Iran had resulted in an increase in benzene consumption in the region, Mehta told ICIS news on the sidelines of 2010 ?xml:namespace>
“The market dynamics is changing in the Middle East with new players coming in, and as distributors we see this as a great opportunity because we have more products to serve the market growth,” Mehta added.
“Benzene is a big product in Iran and Saudi Arabia but it goes into captive consumption [mostly],” he said.
Iran is a net exporter of benzene to Asia and Europe, but a lot of benzene exported by Iran is expected to be channeled for captive purposes with the start up of PARS, a 600,000 tonnes/year SM plant, from the first quarter of 2010.
The recovery in economic growth in 2010 was also a key factor in the increased net demand for toluene and xylenes in the Middle East and India, Mehta said.
“The Middle East market has been growing exponentially despite the debacle of 2008. If you traced a pattern from 2004, there was a growth of 12-15% every year in the Mid East area [until 2008],” he added.
Markets in the Middle East had recovered considerably and demand for toluene and xylenes was expected to increase 2-4% in 2010, he said.
Regional downstream factories in the solvents sector, which had started up before 2008, had increased production figures following the economic recovery thereby increasing the demand, Mehta said.
In the Gulf Cooperation Council (GCC) region, toluene demand was estimated to be about 75,000 tonnes/year, while in India net import demand was estimated at nearly 110,000 tonnes/year.
In India, toluene is produced by Reliance, the major supplier, and a second producer in southern India, but the output was not enough to match the growing local demand, Mehta said.
The steady economic growth in the Indian market would continue to keep demand for toluene in the 7-10% bracket in 2010, he added.
“India has been growing at the rate of 7-8% and for us India has been the biggest growth market because of per capita growth, good geopolitics and good demand,” he said.
However, this growth could be derailed by political issues in the Middle East and the danger that supply may outpace demand in the middle term, Mehta said.
“…We live in an area troubled by geopolitics. The geopolitics does hurt us and sanctions are not good for business,” he added.
Despite the economic sanctions, Mehta believes that Iran would continue to impact the global aromatics trade equation.
“Iran is a major player, and like it or not Iran will always be part of the equation. It’s a monster for the chemical industry that’s going to wake up very soon,” he added.
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