Polyolefin producers in the Middle East are starting up a substantial wave of cost advantaged polyolefins production capacity. This new capacity will impact the industry on a global basis, reports Chemical Market Associates, Inc. (CMAI) in the recently completed 2008 World Polyolefins Analysis. This market study provides clients with historical perspective and insight into the forecast of supply and demand dynamics, capacity, trade patterns, pricing relationships, profitability, production costs and technology for global polyolefin markets for the period 2002 to 2012. Additionally, clients will find CMAI's online Capacity and Supply/Demand databases necessary tools for their strategic business decisions. Some key issues examined in the analysis are:
POLYETHYLENE: Due to significant increases in ethylene and ethylene derivative capacity, the Middle East will affect polyolefin trade and pricing trends through the forecast period. Feedstock cost dynamics have a direct bearing on the cost of producing polyethylene and polypropylene. The next wave of Middle East ethane-based, ethylene capacity is expected to begin coming on line in 2008. This capacity will produce a highly competitive and export-oriented product. As this occurs other regions may be reluctant to invest in domestic production of naphtha- based ethylene, particularly if necessary crude oil based feedstock is relatively expensive.
POLYPROPYLENE: Significant capacity increases across the globe: North America, Asia and the Middle East. CMAI consultants forecast additional capacity of polypropylene will proliferate in the Middle East throughout the forecast period; likewise, significant capacity is projected to be added in North America and Asia. Polypropylene differs from polyethylene, distinguished by the fact that new polypropylene capacity will be geographically diverse. The diversification stems from the availability of propylene monomer, a great deal of which will come from crude oil refineries in the future.
INDUSTRY DYNAMICS: The polyolefins industry is feeling the effects of consolidation and ownership changes. Industry consolidation has made a significant impact by creating fewer resin producers, who now control more assets and greater market share. In addition, ownership of polyolefin producer companies has also changed hands in some major deals in 2007 from oil & gas enterprises to financial enterprises.