SINGAPORE (ICIS)--Trade protectionism will have serious ramifications on downstream industries as it makes countries that adopt such measures less competitive in the international markets, Gulf Petrochemicals and Chemicals Association (GPCA) secretary general Abdulwahab Al Sadoun said.
“We believe that nobody wins from closed market policies. On the contrary, more often than not, countries find themselves on the losing side,” he told ICIS ahead of the 13th annual forum in Dubai on 26-28 November with the theme “Executing Transformation and Investing in Growth”.
“Since its inception in 2006, GPCA has advocated for open market policies as we believe that market liberalization helps individual producers from the Arabian Gulf to gain access to key markets, and the wider industry to earn greater returns,” Al-Sadoun said.
The trade war between the world’s two largest economies – China and the US – is gradually reshaping global trade dynamics, he said.
The raging US-China trade war has raised alarm bells across the world, with economic growth projected to slow down as a result.
“We are yet to see how a fully-fledged trade war will play out long term, but some analysts are predicting a blow to globalization and global economic growth,” he said.
Prices across petrochemical markets have been falling in recent months in Asia, with market participants blaming the demand weakness to the trade struggle between the world’s economic giants.
In the Gulf Cooperation Council (GCC), free access to global markets is a lifeline for the regional chemicals industry as it is predominantly export-oriented with over 80% of its output shipped abroad.
“With recent moves by the US to impose import duties on the EU and China, this could drive GCC leaders to establish free-market alliances and negotiate mutually favorable terms with these countries,” Al Sadoun said.
China is the largest export market for GCC chemicals, accounting for 23% of all GCC chemical shipments, with Europe as the region’s second biggest market.
“The EU also stands to benefit significantly by reaching favorable trade agreement with the region as this would not only result in closer economic ties but afford EU consumers’ access to more competitively priced products,” the GPCA chief said.
As for the US’ sanctions on Iranian oil exports, the Middle East country’s new projects will likely be delayed and postponed in the medium to long term, Al Sadoun said, citing views from analysts.
India is expected to remain a major customer of Iranian chemicals such as plastics and urea, but Tehran’s exports to Europe will likely be hit hard, Al Sadoun said.
“GCC producers are active in many of these key markets, and the main impact from [the] US sanctions on Iran would mainly be felt on the supply side, creating new opportunities for international producers to fill the gaps,” Al Sadoun said.
The GPCA chief expects the group’s upcoming forum in Dubai to generate the same strong interest as in the previous year.
The 12th GPCA Annual Forum in 2017 attracted 2,053 delegates from 591 companies and 49 countries.
“We expect attendance to remain steady this year,” Al Sadoun said.
“This year’s program will examine strategies, case studies and the steps companies can take to enhance their transformational journey."
"In addition, the industry needs to invest and prepare for global growth and the challenges of a changing business environment,” he said.
Picture source: GPCA
Interview article by Tahir Ikram and Nurluqman Suratman
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