Petrochemical Industry in the Middle East: Low Cost Feedstock Providing Competitive Advantage

March 29, 2011 - PRLog -- The recession has slowed the progress of many petrochemical projects globally. The sharp decrease in demand as a result of the downturn has led to reduced utilization rates, temporary shutdowns and in many cases permanent closures. The North American and the European industry is the most affected as a result of this downturn. However the petrochemical projects based on advantaged feedstock or in proximity to demand in dense markets are still going strong.

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The Middle East region, on account of its vast oil and gas reserves, has been developing many new petrochemical complexes. The petrochemical production in the Middle East far exceeds the domestic demand, resulting in a large amount of export surplus. The Asian countries, on account of their huge population and growing economy, particularly China and India, have seen a huge growth in demand for petrochemicals. To meet this demand a large number of petrochemical projects are coming up in these regions. These two regions have changed the dynamics of the global petrochemical industry and resulted in the shift of global supply-demand scenario from West to East.

The production volumes in the Middle East are set to soar on account of the availability of low cost feedstock. The majority of the petrochemicals in the Middle East are made from ethane, which is a natural gas derivative. This gives an advantage to the Middle East as gas is traded throughout the world on a regional level, compared to crude oil which is traded on a global integrated level. The gas is sold at a discounted price to the Middle East producers, giving them an inherent competitive advantage over other global producers. This has resulted in a large amount of capacity additions in the region in the coming future, making it an epicenter of global petrochemical production.

The most important basic chemical is ethylene, which accounts for around 40% of global capacity of basic chemicals. Its price is often used as a proxy for petrochemicals prices as a whole.

GlobalData, the industry analysis specialist, has released its latest research, “Petrochemical Industry in the Middle East - Low Cost Feedstock Providing Competitive Advantage”. The study, which is an offering from the company’s Petrochemical Research Group, provides in-depth analysis of the Middle East petrochemical industry, with production forecasts, key trends, drivers, restraints and challenges until 2015. The study provides detailed analysis and forecasts of industry trends affecting the top producing countries in the Middle East. The report includes historic and future forecasts of major petrochemicals and polymers capacity, production and demand in the Middle East. The report discusses major foreign investments in the region. It also discusses the growth strategies and challenges faced by the major companies of the Middle East. It lists the major deals in the Middle East petrochemical market in the period 2008-2010. Overall, the report presents a comprehensive analysis of the Middle East petrochemical market, covering all the major parameters.

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