By: Frank Esposito
March 29, 2013
HOUSTON — Winds are blowing through international plastic markets in the Middle East, Europe and Latin America. Top officials with plastics and chemicals firms in those regions tried to tame those winds at the IHS World Petrochemical Conference, held March 20-21 in Houston.
Growth in the Middle East now is higher than it is in mature economies such as those in Europe, said Moayyed Al-Qurtas, vice chairman of plastics and chemicals maker Tasnee of Riyadh, Saudi Arabia. The region has a feedstock fuel advantage through ample supplies of natural gas and has built some of the largest petrochemical plants in the world, he added.
The Middle East also has access to financing and growing markets, according to Al-Qurtas. "Some are not looking to the potential of the region," he said. "We are within 1,500 miles of 28 percent of the world's population and 11 percent of the world [gross domestic product], not counting Europe. Our population is growing and our users are becoming more sophisticated."
The Middle Eastern market has come a long way since the 1960s and 1970s, when producers were looking for ways to monetize natural gas that was being burned off in flares. This growth led to Tasnee opening in 2004. The firm now makes high density and low density polyethylene, as well as polypropylene, acrylic acid and related products and compounds.
The next stage of the region's development will require producers moving into specialty chemicals and differentiated commodities, including engineering resins and performance polymers such as polyurethane, Al-Qurtas said.
Greater challenges exist in Europe, where slowing demand and increased imports likely will lead to some plastics and chemicals production being rationalized in the next few years, said Total SA's Graeme Burnett. Burnett serves as vice president of refining and petrochemicals in the Americas for Total, the oil and gas giant based in Colombes, France.
The need to rationalize likely will affect smaller, non-integrated plants, Burnett said. But closing plants in Europe is a lengthy process that can take several years because of labor agreements.
Total has done its part to invest in larger plants by spending more than $5 billion on upgrades to its plants in Normandy, France, and Antwerp, Belgium. Europe remains home to 530 million people and 24 percent of global GDP, he added, and has more than 100 billion pounds of annual resin demand.
Imports of plastics and chemicals into Europe are expected to increase by at least 2 billion pounds annually over the next few years — largely from cost-advantaged new production in North America and the Middle East. But Burnett said there are strategies European producers still can pursue.
"We understand the needs of the European customer and can develop value-added products such as expanded polystyrene and metallocene polyethylene and polypropylene," he said.
Latin America — with a population of almost 600 million that is growing faster than the U.S., Canada and Europe — is providing opportunities for the region's plastics and chemicals makers, according to Grupo Idesa SA de CV's José Luis Uriegas. Uriegas serves as CEO of the firm, a petrochemicals conglomerate based in Mexico City.
Latin America, like the U.S., is benefiting from natural gas supplies that are providing low-cost feedstocks. The region is home to countries with three of the world's 10 largest natural gas reserves — Argentina (third), Mexico (fourth) and Brazil (10th).
Natural gas-based ethane will account for 41 percent of Latin America's ethylene production by 2016, up from its 2012 total of 32 percent, Uriegas said. Mexico now bases all of its ethylene production on ethane. Venezuela has the region's highest petrochemical cost advantage, followed by Mexico.
Foreign trade remains very important for Latin America as a region. Mexico relies on foreign trade for almost 60 percent of its GDP. Argentina, Venezuela and Colombia each have about one-third of their economies tied to foreign trade. Brazil, with a larger domestic economy gets only about 20 percent of its economic activity in that manner.
Grupo Idesa is doing its part to capitalize on low-cost feedstocks by joining Braskem SA in the Ethylene XXI project. Ethylene XXI is a $4.6 billion petrochemicals project that's set to come on line by the end of 2014, producing high density and linear low density PE and ethylene feedstock.