Global PE oversupply to reach 25m tonnes by 2015 - Egypt CEO

02 March 2011 22:42  [Source: ICIS news]

BRUSSELS (ICIS)--Global polyolefins supply will exceed demand by just over 25m tonnes for polyethylene (PE) and slightly above 8m tonnes for polypropylene (PP) by 2015, the head of the sole PP producer in Eygpt said on Wednesday.

However, producers in north Africa and the Middle East should withstand the oversupply to a certain extent because of their feedstock advantage, said Hesham Rafaat, chief executive at Oriental Petrochemicals Co (OPC).

He was speaking at the 6th World ICIS Olefins conference in Brussels, Belgium.

Producers in the Middle East and Africa rely lighter on feeds such as ethane. In Europe, producers rely on heavy feeds such as naphtha, which are more expensive.

Rafaat said it would target the European market for its PP exports in 2011, leaving the Asian market to the larger Middle Eastern producers.

He added that Europe would be able to benefit from the low feedstock cost base in north Africa and competitive freight costs, especially given Egypt's proximity.

Polyolefins demand has recovered from the economic crisis, and Rafaat expected it to return to normal GDP growth rates between 2010-2015.

However, this was not enough due to the over-investment in new polyolefin capacity between 2007-2010, which has resulted in an excess of capacity for both PE and PP.

Cutting utilisation rates was one long-term option to counter the oversupply, but Rafaat stressed that there were other more cost effective options.

He acknowledged that there were challenges that needed to be addressed in Africa and the Middle East, linked to political disturbances, but was keen to point out the opportunities in the region.

For more on PE or PP visit ICIS chemical intelligence

By: Heidi Finch
+44 20 8652 3214

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