PP and PE demand on the rise

  As the Gulf Cooperation Council (GCC) economies recover on the back of higher crude prices, increased oil production and a general sense of stability, heavy investments continue to pour into the petrochemical and plastics industries, supporting the region’s rising stature in this arena.

The UAE as well as Saudi Arabia, Qatar, Kuwait and Oman, have established massive petrochemical production facilities that are amongst the most cost-competitive in the world. Thanks to these developments, the Middle East is anticipated not only as a main petrochemicals hub in the future but also as a major arbitrage point for polymers worldwide, supplying up to 40% of incremental Asian demand for polyolefins in the medium term.

Given low production costs and the cheap availability of ethane and propane feedstock for polypropylene (PP) and polyethylene (PE) production, the Middle East producers have the competitive advantage of offering their produce at lower prices as their Asian-based counterparts deploy expensive feedstock. Hence, it was anticipated that the Middle East-based polymer plants were expected to run at full capacity starting 2011.

Frost & Sullivan forecast the Middle East and Southeast Asia to be the largest PP exporting regions in the world. As a result, Indian based polypropylene manufacturers may face competition from regional suppliers who have an innovative range of grades that can cater to niche-end user applications. The Middle East will cater to PP demand of Africa, Western Europe and the Americas. Southeast Asian and Indian manufacturers will focus on exporting their PP to Northeast Asia, especially China.

Polypropylene is one of the most widely used plastics globally, deployed in applications across a gamut of sectors such as packaging, household, automotive, construction, electrical, textile, agriculture and medicine. The demand for these resins is on the rise as a result of growing demand for products utilising them. For instance, total world pipe demand for all materials grew from 17.7 billion in 2005 to 23.8 billion in 2008 and is expected to grow 31.5 billion by 2015.

Greater role in global supply chain

Global ethylene capacity is seeing a dramatic change with concentration moving from mature markets such as the United States and the European countries to the Middle East and China. More than 19 million tonnes per year of ethylene capacity will come on stream in the Middle EastSNEAKERS