03 April 2012 19:27 [Source: ICIS news]
Financial conditions are considered much better this year, with encouraging developments in the
It may be a good time to expand for those companies that managed to strengthen their balance sheets during the recent petrochemical downcycle, and time the start-up of new capacity to the expected pick-up in demand that is about two years down the road, Standard & Poor’s credit analyst Andrew Wong said.
“Although the operating environment is relatively challenging or uncertain, it’s not going to get worse,” said Wong, adding that some companies have got their eyes in Asia on expansion, hoping to take advantage of an expected upswing in demand.
“Definitely, some companies in the PTT group – their capital structure is very solid, which gives them enough room to grow,” said Wong.
Among those heard to be considering expansion is Shanghai SECCO’s acrylonitrile operations in
In some cases, capacity expansion is long overdue but feedstock deters major investments, like in the monoethylene glycol (MEG) space.
The global MEG market is expected to remain tight over the next three to five years, with no new additional capacity coming on stream.
As the petrochemical product has applications in the very basic necessities like clothing, demand growth is expected to always exceed GDP expansion.
MEGlobal executive vice president for commercial and supply chain operations Frank Hanraets forecast an annual growth of around 6% for MEG demand.
The growth is about double the expected expansion in world GDP.
Unconventional means of producing MEG is being explored given shortage of gas feedstock.
A conventional MEG plant using gas as feedstock is being considered to be built in Kuwait by state-owned Petrochemical Industries Co (PIC), in partnership with EQUATE. The plant is expected to have a capacity of between 500,000-600,000 tonnes.
But other MEG plants based on shale gas, and projects that intended to use coal or methane primary feedstocks for olefin production may take about three to five years to come into fruition, Hanraets said.
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