Indian companies could compete with Middle East petchem producers after 2-3 years

Middle East petrochemical producers are not a real threat to Indian companies and they will still be able to compete, as per head of marketing at India's ONGC Petro additions Limited, in Platts. The next two years are expected to be tough for Indian producers. The impact of cheap ethane gas used as feedstock by the Middle Eastern producers as compared to mainly naphtha-based steam crackers in Asia is expected to lessen over the next two years. He pointed out that while cheap ethane feedstock was the main driver for Middle East capacity in the past, there have been no new ethane allocations for new petrochemical projects in Saudi Arabia, for instance, since 2006. Ethane in the Middle East is now being diverted more to power generation and water desalination plants, and new petrochemical projects are now based on mixed feeds - ethane and LPG, signaling a shift. In addition, several petrochemical projects in the Middle East had been delayed or were operating at lower rates due to non-availability of ethane feedstock or technical issues. The Middle East's ethane-based capacity will be only 16% of global ethylene capacity. So prices will still be determined by high consumption regions like China, Europe and Southeast Asia. The Middle East will be price takers, not price leaders," Dixit said.
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