News focus: Borouge CEO sees Asia polyolefins shift

17 May 2013 09:56  [Source: ICB]

The Asia polyolefins market will shift, both in terms of growth rate and in terms of the nature of product demand, the chief executive of Borouge's sales and marketing arm said.

"We see polyolefins demand growth in Asia and the Middle East at around 6-7% in 2013 - not booming versus a few years ago but still healthy versus the rest of the world," said Wim Roels, CEO of Borouge Pte, on the sidelines of the Asia Petrochemical Conference (APIC) in Taiwan.

"China is seeing a maturing of demand. We're now seeing a different style of business - not explosive growth but a more mature, controlled growth," he added.

Wim Roels

"We expect infrastructure spending in China to pick up with the new government in place"

Wim Roels
CEO, Borouge Pte

The polyolefins market in China is also shifting from an emphasis on volume to one on quality, and from export-oriented consumption to internal consumption, the CEO noted.

"China exports of manufactured goods will slow but this will be compensated by more growth in domestic consumption," said Roels.

A major driver of China polyolefins demand growth is a continuing migration of the population into mega cities.

"Growing cities require pipes for water, sanitation and gas, as well as wire and cable for power. Also, food packaging becomes more important in cities as more food is bought from supermarkets," said Roels.

China government infrastructure spending is also an important driver of polyolefins demand. "We expect infrastructure spending in China to pick up with the new government in place, with a shift from east to west China," Roels said. Borouge is exploring logistics solutions to cater to this trend, he added.

PREPARE FOR BOROUGE 3

The start-up of the highly anticipated Borouge 3 project in Ruwais, Abu Dhabi in early 2014 is expected to raise the company's olefins and polyolefins capacity by 2.5m tonnes/year, to around 4.5m tonnes/year.

Abu Dhabi-based Borouge is aiming to export polyolefins primarily to Asia, with a geographic spread across China, Japan, Indonesia, Vietnam, Thailand, Australia and New Zealand.

It also plans "significant" exports to Europe and is already sending small quantities there and to Turkey to test the market and prepare for volumes from Borouge 3, said Roels.

"We aim to complete the project by this year and start commercial operations at the beginning of next year," he noted.

"And as of next year we will get refinery propylene from Takreer [Abu Dhabi Refining Co]," he added.

Takreer, a subsidiary of Abu Dhabi National Oil Co (ADNOC), will provide about 1m tonnes/year of propylene to support Borouge's increased production of polypropylene (PP), once Borouge 3 starts up. Borouge is a joint venture between Austria's Borealis and ADNOC.

Borouge 3 covers the construction of a third ethane cracker; two Borstar polyethylene (PE) plants; two Borstar polypropylene (PP) plants; and a low density polyethylene (LDPE) unit. German engineering company Linde is building the 1.5m tonne/year cracker.

The two Borstar PE units will have combined capacity of 1.08m tonnes/year while the two Borstar PP units will have a combined capacity of 960,000 tonnes/year. The proprietary Borstar technology allows for flexibility in product specifications. The LDPE unit will have a 350,000 tonne/year capacity.

The project also includes an 80,000 tonne/year cross-linked PE (XLPE) plant, which will complement the LDPE unit, and cater to the wire and cable segments.

The impending start-up of the massive capacity has negative implications for Europe's polyolefins producers. "Europe's crackers are challenged by the competitiveness of US shale on one side, and Middle East capacity on the other," said Roels. "The volume balance will shift to large plants in the Middle East. The future in Europe must be in high-end production."

CHINA EXPANSION

Meanwhile, the company is planning to expand its existing 50,000 tonne/year compounded resins plant in Shanghai, China, to 90,000 tonne/year, by 2015, according to Roels. The plant focuses on high quality compounds for automotive customers.

"We are doing the FEED [front-end engineering and design] phase for basic engineering at the moment and we are looking to have a final investment decision this year," he said. The US shale gas boom and the resulting crackers being built there will have a limited impact on the global petrochemical market, Roels contended.

Borouge 3

"There will be some global impact but a limited one. The capacity additions in the Middle East and Asia - in terms of speed and feedstock - are much more significant," he said. "It will have more of an impact on the Americas market. There will be some volume flows to Europe and Asia but limited."

Expected capacity additions of around 6-7m tonnes in the US by the end of the decade would be dwarfed by the 37-38m tonnes in Asia and the Middle East over the same period, he noted. "It's good to keep the US shale gas impact in perspective," Roels said.


By: Joseph Chang
+1 713 525 2653



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