Middle East petrochemical producers begin global expansion

With the support of low-cost raw material advantages, the Middle East region will develop into an important export base for petrochemical products in the world in the next few years. In the next 10 years, the ethylene capacity in the Middle East will quadruple. According to the analysis of the SRI consulting company, the capacity of the ethylene plant to be put into operation in the Middle East by 2016 will be no less than 27 million tons/year, and there will be more than 17 million tons/year of capacity will be put into operation in 2008–2012.
The investment amount of the project has greatly increased. Petrochemical construction in the Middle East also faces some challenges, mainly due to the increase in engineering, construction and labor costs, and delays in project construction. According to the established plan, major ethylene projects in Iran, Kuwait, Qatar and Saudi Arabia will start production in 2008.
The impact of the increase in project construction and material costs has led to a significant increase in project investment. Petro Rabigh's investment in projects has more than doubled to $10 billion. The investment in the Saudi Kayan unit, which will be put into production in 2010, has nearly doubled from a preliminary estimate of 3.5 billion U.S. dollars a few years ago to 10 billion U.S. dollars.
Ethylene Derivatives Export Worldwide The recent “Annual Outlook for Global Chemical Industry” report by Chemical Week, USA, shows that the supply of ethane in the Middle East is being constrained. With the shift of some companies to heavier raw materials, the cost of ethylene production is expected to increase. At present, the development of global LNG trade is changing the pattern of the world natural gas market. The high energy prices are making global raw material costs rise.
Despite these challenges, the addition of new petrochemical capacity in the Middle East will continue to shift ethylene derivatives to global trade. North America was the world's major export area 10 years ago, but its export volume has now been exceeded in the Middle East. By 2010, the Middle East will become the only global net exporter of ethylene derivatives, and North America will become a net importer. About 60% of the ethylene derivatives in the Middle East will be exported to China and Asia, and 30% to 40% will be exported to Europe.
The peak in ethylene production Some manufacturers delay or cancel device construction, will keep the global market prices firm. According to the analysis, delays in the commissioning of some plants may have little effect. If the 5 million tons/year ethylene capacity is delayed for 1 to 2 years, the impact on global operating rates will not be significant. The bottom line for operating capacity in 2011 is 88%. If the project is put into production according to the current plan, the bottom line will be 85%.
According to the analysis of United Chemical Manufacturers United Corporation, 2008 will be a turning point in the production of petrochemical products. If some Saudi projects are planned to start production in the second half of 2008, the market will reflect this. The future ethylene industry will enter the down channel and its profits will be squeezed from 2009 to 2012.
Manufacturers Aspire to Global Management Given that the petrochemical industry in the Middle East has matured, some producers in the Middle East are now turning to global producers, expanding their markets outside the Middle East, and expanding their ethane-based product model. . In early 2007, Cristal, which is controlled by Saudi Arabian Tasnee Petrochemicals, acquired Leondell’s titanium dioxide business. In September of the same year, Sabic acquired GE Plastics for US$11.6 billion, raising its global leading position in the field of engineering plastics.
Sabic has set goals that will make 20% of its sales come from highly profitable specialty products. These companies said that in the expanded areas, the future prospects are clear. In view of the shortage of raw materials, these companies will go beyond the basic chemicals business and diversify into the specialty products sector.

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