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GCC plastic manufacturers identify growth drivers.

Historically, the middle class has been a major consumer of polymers, and with global population set to include over 60 per cent of people within this demographic by 2030, demand for commodity plastics will grow.

Dubai -- Plastic manufacturers must develop strategies that can overcome global feedstock challenges and meet demand from high population growth regions in order to continue to grow and prosper, said speakers at the sixth annual GPCA Plasticon conference in Dubai.

"Major regional developments in the areas of automotive, aviation, renewable energy and other industries provide opportunities and demand for the local plastics industry," said Abdulaziz Alhajri, CEO, Borouge, and chairman of the GPCA's Plastics Committee. "This, in turn, fosters demand for the education and training of young people by generating employment and career opportunities for Gulf nationals."

"We are not here to forecast the prices of oil because we can't even predict what the price will be next week," said Ziad S. Al Labban, CEO, Sadara. "What we can do is to chart trends in the polymer industry to figure out where the market is headed."

In Asia and India, high demand for petrochemicals has far outstripped the level of supply. "This region has added 150 million tonnes of capacity since 1990 but supply is not fulfilling demand. So this [region] has the potential to be a major market for GCC polymers."

Historically, the middle class has been a major consumer of polymers, and with global population set to include over 60 per cent of people within this demographic by 2030, demand for commodity plastics will grow, explained Al Labban.

However, as nations develop, the production side of the petrochemicals industry evolves towards manufacturing more specialty chemicals. "Today, the GCC's products portfolio consists of only 0.2 per cent of specialty chemicals and this will need to change," said Al Labban.

Al Labban said that the region must leverage its core strength of being strategically located in close proximity to areas that will experience population growth spurts. "Forty per cent of the world's population is within 3,000 kilometres from our manufacturing units."

Moving forward, companies in the GCC must also use technology to withstand market uncertainties. "At Sadara, we have the world's largest mixed feed cracker. Two of the 12 furnaces in our facilities can swing from gas to liquid feedstock depending upon the market conditions," explained Al Labban. "I recommend creating value by using technology to go into specialty products because the future in commodities is limited."

These sentiments were echoed by Abdullah bin Saleh Al Suwailem, CEO of Petro Rabigh. "The GCC petrochemical industry is a gas-based industry with limited liquid feedstock capabilities," said Al Suwailem. "Refocusing our commodities base towards a more specialty chemicals portfolio will open up growth and investment opportunities. These value-creating products are also aligned with the national strategies of GCC governments as they offer significant opportunities for job creation."

While challenges associated with the oil price decline may have an effect in the coming months, there are also other market fluctuations that have affected the region's petrochemical producers recently.

"Legacy thinking of the GCC's competitive advantage includes the lowest polymer price globally, low utility and labour costs, strategic location among others," said Mosaed Al Ohali, executive vice-president, polymers, Sabic. "However, this is changing. If you look at polymer trade with the European Union between 2013 and 2014, there is a US$200 per tonne loss in competitiveness due to rising import tariffs, increasing labour costs and a growth in inflation."

The sixtth annual Plasticon hosted 300 delegates and 18 speakers over a two-day conference.

business@khaleejtimes.com

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Date:Jan 12, 2015
Words:613
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