Sponsored By

May 1, 2007

3 Min Read
Onward and eastward

At a time when polyolefin production in Western Europe and North America is flat or in decline, growth in the Middle East and Asia is exploding, signifying a shift in plastics’ center of gravity that’s gaining momentum.

The process for polyethylene (PE) began last year, when 1.7 million tonnes of capacity were added in Asia, with all but 120,000 of that in China. In 2007, Asia will add 250,000 tonnes, then take a year off in 2008, before reinvesting in earnest in 2009, with six new plants in China, three in Thailand, and one in India, resulting in 5.2 million additional tonnes.

Same song different tune in polypropylene (PP): 1.8 million tonnes added in Asia last year, with six of the seven plants in China; 750,000 in 2007, with more than half in China; 620,000 tonnes in 2008, with 370,000 of that in China, and 3.9 million tonnes in 2009, with six plants and 2.3 million tonnes of that into China.

The last figure drew audible gasps from attendees at the polyolefins session of Chemical Market Associates Inc.’s (CMAI) World Petrochemical Conference (March 20-22; Houston). In a crowd primarily consisting of North American-based petrochemical and plastic manufacturers, many openly wondered about their future prospects in the face of the Asian polymer onslaught, asking the speaker panel outright during the Q&A session.

“We expect to see further consolidation here and Europe,” conceded Howard Rappaport, global practice leader, thermoplastics, for CMAI. “There are some smaller, older facilities that are higher cost.” When asked point blank if North American PE producers can survive: “Yes, if you look at Europe as an indicator of things to come, resin converters and producers aren’t going away, they’re refocusing.”

Looking eastward

Perched on the Middle East’s doorstep, Europe has largely withstood the region’s increase in olefin production, but now the continent, as well as North America, will face a new wave of resin capacity, with Saudi Aramco pairing with Sumitomo and Dow for separate forays into polymers, among other significant investments.

Sherman Glass Jr., Sr. VP for ExxonMobil Chemical, who gave the keynote address at the CMAI conference, said that his company has four large polymer investments ongoing in Asia, including a worldscale polyolefins joint venture with Aramco and the Chinese government in Fujian and a parallel train at its existing Singapore site. He forecast that by the end of this decade, the U.S. will be a net importer of chemicals, with 60% of the world’s petrochemical growth coming in Asia, and half the global demand for chemicals in Asia.

Gary Adams, CMAI president, said for the first time he can remember, Europeans were more optimistic about the future of petrochemicals than Americans, adding that 70%-90% of new capacity would locate in the Middle East and China by 2015, compared to 20%-30% in the past.

2009-2011 bubble

The growth will outpace demand, however, even on a global basis, with Adams saying “2009 will be a challenge” and comparing the situation to a train wreck, with Europe and North America stuck on the tracks as speeding trains of chemicals and plastics from the Mid East and plastics and goods from China collide.

Steve Zinger, managing director, Asia, for CMAI, believes that collision, and what he calls the “euphoria” that precedes it, will lead to an inevitable hangover. “This industry needs to quit investing while it’s ahead,” Zinger told the crowd, but added that Asia will remain “the place to be” for the next 15 years and beyond.

Back in the Middle East, CMAI’s Tony Potter sees a “fourth wave,” on the basis of the development of non-associated gas, or natural gas pulled from the ground on purpose, versus the gas that comes up with oil and is either burned off, reinjected into the ground, or left in the crude. In addition to ethylene, Middle East propylene capacity will triple over the next five years, with technologies like propane dehydrogenation allowing propylene to be derived from natural gas. “No one is immune from Middle East [petrochemicals],” Potter flatly declared.

Sign up for the PlasticsToday NewsFeed newsletter.

You May Also Like