GPCA: A bigger return from the market

22 November 2012 16:22  [Source: ICB]

Petrochemical producers based in the Gulf region are shifting their product portfolios to more value-added polymers such as compounded polyolefins, polyurethanes (PU), engineering plastics, performance polymers and synthetic rubbers to regain competitiveness and create more jobs.

Young Saudi Arabians Rex Features

Rex Features 

Saudi Arabia's young population is an important consideration

The move is intended to improve the profitability of producers, as commodity products such as polyethylene (PE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) are exposed to price competition from their counterparts based in countries such as Iran and China.

But the move to diversify downstream is also an attempt to tap into the young demographics in the region. "[The] upstream petrochemical industry is chemical intensive, but not labor intensive," says GPCA general secretary Dr Abdulwahab Al-Sadoun. "Especially in Saudi Arabia, about half the population is below 25 years old. These are job seekers," adds GPCA committee member Manfred Klepacz, CEO of the industrial sector of Al Rajhi Holding.

High-density PE (HDPE) makers, such as the National Industrialization Company (TASNEE) and Saudi Kayan Petrochemical have raised their production capacities for compounded pipe grades, where netbacks are more lucrative.

Saudi Arabia's National Petrochemical Industrial (NATPET) and A Schulman of the US have formed a 50:50 joint venture that will bring a new 100,000 tonne/year PP compounding unit on line in Yanbu, Saudi Arabia, by the first quarter of 2015, subject to eligibility for additional gas allocation.

In an expansionary move, Saudi Basic Industries Corp (SABIC) has intentions to venture into the PU business. It has signed a technology licence agreement with Japanese producer Mitsui Chemicals for production of toluene di-isocyanate (TDI) and methyl di-p-phenylene isocyanate (MDI).

SABIC plans to bring a world-scale isocyanates complex on stream in Saudi Arabia by 2015. The agreement covers joint technology development for TDI and MDI, which are raw materials for the production of PU.

Polymers

"Through this technology licence agreement, we will strengthen our product capabilities with high-quality TDI and MDI and expand into the polyurethane business," said Mohamed Al-Mady, SABIC's vice chairman and CEO. "The agreement will spur our strategic business plan to penetrate the global polyurethane market," he said.

The first Middle East PU facilities are expected to be operational in 2013, developed by Saudi Advanced Industries Company and TASNEE. TASNEE's 120,000 tonne/year polyether polyols plant - the first in the Middle East - is expected to start-up by end of 2103.

Following this, Sadara Chemical - a joint venture between Saudi Aramco and US-based Dow Chemical - will start up isocyanates and polyether polyols plants in Jubail Industrial City II. The first production units at Sadara's new complex are expected to come on line in the second half of 2015. All units are expected to be up and running in 2016.

ENGINEERING PLASTICS

Besides compounded polyolefins and PUs, the Gulf has and will be welcoming engineering plastics facilities in the coming years.

Mohamed Al-Mady

"The agreement [with Mitsui Chemicals] will spur our strategic business plan to penetrate the global polyurethane market"

Mohamed al Mady
vice chairman and CEO, SABIC

Octal has added two more PET lines with a total of nameplate capacity of 527,000 tonnes/year at Salalah, Oman, to reach an overall nameplate capacity of 927,000 tonnes/year - becoming the world's largest PET maker.

Saudi Kayan Petrochemical started-up its Al Jubail-based 260,000 tonne/year polycarbonate plant - the first in the Middle East - in 2011. PC is a high-specification engineering plastic, suitable for molding and with a high impact resistance.

SABIC subsidiary Petrokemya has signed a deal with Spanish oil engineering firm Tecnicas Reunidas to build a 140,000 tonne/year ABS plant at Al Jubail in Saudi Arabia, the chemicals major announced on 9 June this year. The unit is expected to be mechanically competed in the fourth quarter (Q4) of 2014. ABS is a raw material in the manufacture of automotive and electrical appliance industries.

Sumitomo Chemical and Saudi Aramco are also part of the spree of engineering plastics' production. Their joint venture in Saudi Arabia, Petro Rabigh, will start up its Rabigh II project in the first half of 2016. This includes EPR, TPO and PMMA. Petro Rabigh is still looking at opportunities of other engineering plastics such as nylon 6.

Ibn Sina - a joint venture between SABIC and Celanese of the US and affiliate of Duke Energy Corp - intends to complete construction of its 50,000 tonne/year POM unit in Al-Jubail in 2013, a company source said.

Saudi Industrial Investment Group (SIIG) and Arabian Chevron Phillips Petrochemical are planning a polyamide (PA) 6,6 and several polymer conversion projects such as high-performance PE pipe and PA 6,6 compounding.


By: Ong Sheau Ling
+65 6780 4359



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