GCC plastics sector booms

Lower gas prices, higher prices for plastics products compared to other petrochemicals and an increasing insistence by governments in the GCC to use their gas instead of flaring it is giving rise to a booming plastics industry in the region.

The industry trend is being set by Borouge, which plans to produce 4.5 million tonnes of petrochemicals annually by the end of 2013 – all of which will be plastics.

Even though just 20 per cent of the GCC petrochemical produce is plastics products it accounts for 70 per cent in terms of value.

According to latest reports, the polyethylene (a plastic polymer) production capacity in the Gulf will increase from 10.7 million tonnes in 2009 to 21.5 million tonnes by the year 2015, an increase of slightly more than 100 per cent.

"Likewise, the production capaciy of polypropylene (another polymer) will increase from 4.8 million tonne in 2009 to 9.5 million tonne by year 2015, an increase of 98 per cent. This will bring the combined production capacities of the two major polyolefin resins to more than 31 million tonnes by the year 2015."

A trading community wanting to deal in polymers is also emerging in the region. Furthermore, there are banks, consultants and financial institutions looking to tap into the markets.

Two recent events – a plastics summit organised by the Gulf Petrochemicals and Chemicals Association (GPCA) and a oil and petrochemicals briefing organised by the Dubai Multi Commodities Centre (DMCC) – saw a packed audience of traders and bankers.

"We will be focusing completely on plastics polymers. And we will be tapping the niche markets," Laurence Jones, Vice-President (Corporate Support) at Borouge, told Emirates Business in an interview.

"Instead of commoditising our products, we want to make niche products for our buyers," he added.

Sources said agencies such as Platts and Chemical Industry News and Intelligence (ICIS) are expanding their presence in Dubai to be able tap this emerging petrochemicals hub.

"Today, the GCC is one of the most important places if you want to tap the plastics market," an ICIS official said.

Using gas – primarily ethane – in plastics polymers manufacturing plants is giving the producers a vent out of the process of flaring wherein they flared a mix of methane, ethane and propane. "At Borouge we are channeling most of the ethane into our plants that convert it into ethylene and polyethylene and polypropylene," said.

"All the feedstock at our Equate plant is gas," Muayad Al Faresi, Regional Sales Manager, Equate Petrochemical Company, Kuwait.

Saudi Arabia Basic Industries Corporation (Sabic) has set up a three million tonnes plastic resin plant in a 50-50 partnership with the China Petroleum and Chemical Corporation.

"It's a strategic move for us to be near the markets," said Khaled Al Mana, Executive Vice-President, Polymers at Sabic, at the GPCA conference. The move has been followed by Borouge, which has set a small polypropylene unit in China.

The Middle East will increase its share of global PE capacity from 13 per cent in 2008 to 19 per cent in 2015, making it the leading global player. The Mideast's PP share will rise from nine per cent in 2008 to 13 per cent in 2015, placing it behind Asia/Pacific.

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