FocusAFPM ’13: Petchem investments shifting to gas-rich US, Mideast

26 March 2013 16:54  [Source: ICIS news]

By Pearl Bantillo

SAN ANTONIO, Texas (ICIS)--New petrochemical capacity investments may be shifting away from Asia to the US and the Middle East, where an abundant supply of ethane – a cheaper alternative feedstock for production to naphtha – can be found, industry sources said.

At the International Petrochemical Conference (IPC) in San Antonio, some global industry players are seriously looking at building new facilities in the US, in view of the relatively recent shale gas boom, which is expected to usher in a renaissance of the petrochemical industry in the world’s biggest economy.

The same sentiment goes for the Middle East as a potential location of new capacity as the region has always enjoyed cost advantage because of its gas-based production.

In Asia, on the other hand, petrochemical production is mainly based on naphtha, the prices of which have been moving in line with crude.

At the close of trade in Asia on 26 March, open-spec naphtha for first-half May was assessed at $928-930/tonne CFR (cost and freight) Japan, according to ICIS.

South Korea’s Songwon Industrial, a major producer of plastic stabilisers with Europe as its biggest market, is considering the US and the Middle East as a possible location for a new plant.

Should it decide to build a facility in the US, Songwon has plans to market products to the north and south Americas. If in the Middle East, the plant is expected to serve the Indian market, Songwon chief operating officer Mario Butti said.

Dubai-headquartered MEGlobal is planning to build a world-scale monoethylene glycol (MEG) facility at Freeport, Texas in the US, and is currently seeking approval from its shareholders from the project.

MEGlobal executive vice president Frank Hanraets said that the proposed plant will market its output in the Americas, and will allow the company to ship out more products from its three MEG facilities in Canada into Asia.

The company is a joint venture between US' Dow Chemical and Kuwait’s Petrochemical International Corp (PIC).

“They [the US and the Middle East] are very competitive because of cheap natural gas, and competitive hedge in production cost,” an industry source said.

“Within five years, the commodities will be exported from the Middle East to Asia, and [from the] US to the Asian markets,” the source said.


By: Pearl Bantillo
+65 6780 4359



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