29 November 2012 18:16 [Source: ICIS news]
DUBAI (ICIS)--Demand for polyolefins is expected to grow at 5-6% in 2013 in Asia and the Middle East, despite the challenge posed by the slow recovery in the global economy, a senior official at plastics company Borouge said on Thursday.
“Although consumption of durable goods in major Asian markets, such as China and India, has not been very strong this year, I am cautiously optimistic that demand for polyolefins will grow at a steady pace in 2013,” said Wim Roels, CEO of Borouge’s marketing and sales company.
He was speaking with ICIS on the sidelines of the 7th GPCA (Gulf Petrochemicals & Chemicals Association) Forum, held in Dubai, United Arab Emirates (UAE), from 27-29 November.
The infrastructure segment – which includes water supply and communications – would provide a boost to the economy in Asia and the Middle East in the next few years, he added.
The focus on value-added products catering to these two segments is exemplified by Borouge’s decision to convert the 540,000 tonne/year PE plant at the Borouge 2 complex at Ruwais, Abu Dhabi, in the UAE, to a dedicated facility that will only produce PE pipe and wire and cable grades.
“Value addition, differentiation and sustainability are key to Borouge’s growth strategy, and this will help us overcome any challenges and remain competitive,” he told ICIS.
Borouge is a joint venture between state-owned Abu Dhabi National Oil Company (Adnoc) and Austria’s Borealis.
The addition of an 80,000 tonne/year cross-linked PE (XLPE) unit to the Borouge 3 complex is another indication of Borouge’s commitment to catering for the wire and cable segment, the CEO said: “By using the innovative Borlink technology introduced by Borealis, XLPE can provide a solution for the high-voltage wire and cable applications.”
Access to low-cost feedstocks is crucial in the race to gain competitiveness, Roels said: “Although there is a challenge being posed by the access to low-cost shale gas in the US, I think Middle East producers such as Borouge can remain competitive by adding value, differentiating their portfolio and supplying a service, rather than a mere product.”
There were plenty of opportunities to create sustainable products for the Middle Eastern and Asian markets, Roels said: “Downgauging is one way to contribute to sustainability, as it will reduce both transportation costs through weight reduction and also offer the customer better quality.”
Penetration of new markets is also key to the Borouge growth strategy. With more expansions underway, the company is looking to export polyolefins to Europe through Borealis.
With the start-up of Borouge 3, the company’s polyolefins capacity will increase from 2m tonnes/year to 4.5m tonnes/year.
“Of course, it’s a challenge to operate in a market such as Europe, which is currently not growing,” he said. But penetrating Europe would help Borouge to establish a more global presence, beyond the Middle East and Asia.
India is another challenging market to penetrate, Roels said: “Price is still given priority over quality, and there isn’t enough consumer awareness of the long-term repercussions of using inappropriate material, such as natural grade PE pipe, which can easily cause contamination of water supply.”
The steady depreciation of the Indian rupee versus the US dollar during this year has also blunted the appetite for imports, he added.
Borouge is studying the possibility of setting up a PP compounding facility in India, Indonesia or Thailand, with a decision expected to be taken in 2013.
The company is also proposing to set up a sales office in Delhi in the first quarter of 2013, in addition to the one in Mumbai.
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