InterviewGPCA ’11: Asia, Mideast PE, PP demand to grow 5-6% - Borouge

14 December 2011 04:06  [Source: ICIS news]

By Prema Viswanathan

The expected increase in domestic consumption in big markets in Asia and the Middle East is expected to drive growthDUBAI (ICIS)--Demand for polyolefins is set to grow at a moderate single-digit pace next year in Asia and the Middle East despite the turbulence caused by the ongoing credit crisis in Europe and slow economic recovery in the US, a senior Borouge official said late on Tuesday.

“I expect demand growth for polyethylene [PE] and polypropylene [PP] in Asia to hover around 5-6% in 2012, based on the expected increase in domestic consumption in big markets such as China, India and Indonesia, with the Middle East also showing a similar growth,” said Wim Roels, CEO of Borouge’s marketing and sales company.

He was speaking at an interview on the sidelines of the 6th GPCA (Gulf Petrochemicals & Chemicals Association) Forum, which is being held in Dubai.

Demand growth has taken a hit in 2011, following the strong performance in 2010. However, Roels is hopeful that the downward trend will not continue into 2012.

His optimism is based on the assumption that the Asian economies will continue to grow, that European leaders will eventually find a way out of the current crisis and that the US will continue on the path of slow recovery, Roels said.

The Chinese government has already taken steps to stem inflation through credit control measures and thus manage the growth of the domestic economy, Roels said. A moderate pace of growth is preferable to wild swings from high to low growth, he added. In addition, the trend towards increasing urbanisation in Asia will trigger increased demand for power, gas, water and sanitation and thereby for plastic cables and plastic pipes.

With many Asian cities housing populations of 20m-30m, feeding them will create increased demand for packaging, he added. “Borouge is in a position to offer a whole range of packaging requirements which will address the need for cost efficiency, environmental sustainability and reduction in wastage,” said Roels.

Two key downstream segments Borouge has begun to focus on recently (in addition to its traditional focus areas) are the automotive and household appliances sectors, Roels said. “These are relatively new focus areas for us, but we see strong growth potential for them in Asia,” he said.

In line with the new focus, the company plans to ramp up capacity at its 50,000 tonne/year PP compounding facility at Shanghai and set up a 105,000 tonne/year compounding plant in Guangzhou by 2014, when output from the Borouge III complex at Ruwais in Abu Dhabi will hit the market, Roels said.

With the start-up of Borouge III, the company’s polyolefins capacity will increase from 2m tonnes/year to 4.5m tonnes/year.

Borouge is studying the possibility of setting up a compounding facility in India, Indonesia or Thailand, and a decision will be taken in 2012, he said.

“Our aim is to have a differentiated product portfolio which will cater to customer needs and also develop the full potential of our Borstar technology,” Roels said.

Borouge’s Abu Dhabi innovation centre, which has been operational for a year, and its applications centre in Shanghai will help support the drive towards customer-oriented innovation, he said.

Another focus area is extending its footprint in the key China market by establishing a sales company in western China in 2012, on the heels of the conversion of its representative office in Beijing into a sales company last year.

India is another key market Borouge intends to focus on increasingly. “Along with our existing two logistics hubs in China and one in Singapore, which cater to the Chinese and southeast Asian markets, we are also studying the possibility of setting up a warehouse in southern India,” said Roels. The western India market could be fed directly from Abu Dhabi, but the company needed to get better distribution access to the burgeoning southern India market, he added.

The 6th GPCA Forum is being held on 13-15 December, with the theme “Moving Downstream – Creating Value and Sustainable Growth”.

For more on polyolefins, visit ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Prema Viswanathan
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