Gulf region as fast-growing plastics hub

 Zainab Mansoor

At the second Gulf Petrochemicals and Chemicals Association (GPCA) Plastics Summit held in Dubai, interesting findings regarding the plastics supply chain cycle surfaced. The aftermath of the 2008-hit recession and the impact for plastic suppliers in the GCC region remained one of the most prominent topics in the summit discussed by various key speakers and market veterans who shared their vast insights.
Jon Nash, Director at AMI Consulting, discussed the various conditions that erupted after the turbulent financial times that engulfed the region in 2008, its aftershocks that continue to trickle down, years later and the outlook for the plastics conversion industry in the GCC. AMI Consulting provides market analysis in terms of in-depth multi-clients reports, feasibility studies, customised market research and single-client services in addition to organising conferences, seminars and offering various database products and information about key plastic operators in the region.
The recession in 2008 brought an immediate bout of destocking that kicked off in 2008 and continued in the first two quarters of 2009, virtually affecting regions around the world. Demand did recover a bit in BRIC (Brazil, Russia, India and China) countries in the second half of 2009 and continued to improve throughout 2010. However, the bounce in global demand gave resin suppliers a relative jolt as resin supplies were tight and prices pushed upwards. Conditions in 2010 have posed a number of macroeconomic risks in 2011 of which inflation and unstable commodity prices remain prominent. Additionally, lack of willingness of markets to fund government spending also poses considerable concerns.

Plastic convertors in the GCC region
The Gulf region currently produces over 25 million tonnes of plastic resins on an annual basis of which only 3 million are converted to finished and semi-finished industrial and consumer plastic products.

According to Nash, around 500 to 600 significant primary convertors exist in the GCC region, of which the 50 largest account for 50% of the total production. There are 250 film extruders, 200 injection moulders, 125 blow moulders and 125 pipe and profile extruders.
However, on a comparative basis, the number of converters in the GCC market is quite low, compared to those in developed countries. Figures revealed approximately 5,000, 2,500, and 1,500 significant primary convertors in Germany, Spain and Turkey, respectively. These are in addition to 15,000 injection moulders, 2,400 blow moulders, 2,300 film extruders, 2,200 pipe and profile extruders and 2.5 million direct jobs in Europe created due to the industry.
The GCC accounts for just 2% of the global plastics conversion market but annual growth is expected to reach 9% to 11%. However, the region poses immense potential; IMF forecasts suggest that GDP in the GCC region for 2011 will be at least 8% higher than in 2009 with Qatar leading the way with forecasts of 10.6% growth in 2011. However, global GDP growth in 2010 was 4.4% whilst forecasts for 2011 are slated at 4.5%. It was noted that the plastics conversion sectors had the underlying capacity to grow significantly faster than the projected GDP figure.
The Gulf region has become a leading global centre as far as production and export of plastics raw materials is concerned. It is expected that by 2015, production of polyethylene, polypropylene, PVC and polystyrene in the region will double to reach more than 23.6 million tonnes compared to last year's figure of 13.5 million tonnes -- a staggering 75% increase.
According to the Plastics Industry consultants, Hipro Consultancy, the GCC consumed about 2.5 million tpa of polymers in 2009, mainly in the packaging (45%) and construction (27%) sectors. Hipro further stMen's Shorts - Shop Men's Shorts Online