09 December 2010 06:30 [Source: ICIS news]
By Prema Viswanathan
DUBAI (ICIS)--Petrochemical producers from the Gulf Cooperation Council (GCC) region are cautiously optimistic about achieving good netbacks in 2011, they said on Thursday, supported by strong demand in emerging markets such as China, India and South America.
"While petrochemical demand in the developed world is not expected to grow at a spectacular pace, emerging markets such as ?xml:namespace>
The executive, who wished not to be identified, was speaking with ICIS on the sidelines of the 5th Gulf Petrochemicals and Chemicals Association (GPCA) forum being held in
GDP growth in
Similar sentiments were expressed by the American Chemistry Council's chief economist, Kevin Swift, who said in New York this month that during the next two years, the most rapid growth would occur in the emerging nations, most notably in
Another positive for the GCC producers was that the spectre of overcapacity which had haunted them at the GPCA forum this time last year seemed to have receded. Most of them heaved a sigh of relief that the price collapse they had feared did not come to pass.
On the contrary, prices of most products have been rising sharply in recent months, barring some volatility, with at least one GCC producer, who wished not to be identified, expressing concern of downward pressure on prices in the second half of next year.
"The fundamentals are still strong in key markets such as
Borouge has been growing its distribution and compounding presence in
Other producers like SABIC and Saudi Aramco have been embarking on joint ventures in
But concerns over trade barriers continue to worry
"The structural imbalance between developed and developing economies following the global economic downturn has led to more protectionism in the developing countries," said SABIC CEO, Mohamed Al-Mady.
Another worry is the dearth of gas feedstock in some of the GCC countries, notably
"Natural gas is available in Saudi Arabia in the long term, but in the near term there could be shortages as extraction projects are not moving ahead at a fast pace," said a senior official with a Saudi petrochemical company.
Meanwhile petrochemical end-users in the GCC were concerned that their margins would be further squeezed if prices continued to climb in 2011 on the back of higher crude and feedstock prices.
PP homopolymer grade prices, for example, rose by about $80/tonne (€60/tonne) to $1,400-1,420/tonne CFR (cost & freight) GCC for December cargoes from November levels.
"We were hoping for [an easing] in polymer prices by end 2010, but now that looks like wishful thinking. It is becoming extremely hard for us to pass down our raw material costs to our customers," said a PP converter in
The three-day annual GPCA forum runs through 7-9 December.
($1 = €0.75)
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