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The petrochemical industry in the Asian region has shown
significantly better growth over the last decade leading to enhancement
of the living standard of its very large population.
In fact, the Middle Eastern region has used it's
surplus oil and gas to serve the incessant demand of petrochemical
products of the Asian region. The expansion, resulting in more than
4-5 million tonnes of Ethylene derivatives from the Middle Eastern
region, will continue for the next 5 years, making the Asian investor
a little wary of larger investment in Petrochemical sector.
The Middle Eastern region has tremendous advantage
of low cost feedstock (Ethane/Propane gas). The surplus availability
of gas in the Middle Eastern region makes them the most economical
manufacturers.On the other hand, the Asian Petrochemical producers
have to resort to high cost Naphtha feedstock for petrochemical
projects because they do not have enough gas. In fact, Naphtha also
has to be procured predominantly from the Middle East. Of course,
Naphtha could also be obtained from Asian refineries. Whatever be
the source, Naphtha as feedstock is more expensive compared to the
gas available to the Middle East petrochemical producers. Besides,
the lower profitability on petrochemicals over the last couple of
years has put additional pressures on the Asian petrochemical producers.
The general economic slowdown of the last 1-2 years
has also adversely affected the growth of petrochemical industry.
No wonder the investment in the Asian region on petrochemical projects
has slowed down. Of course, the economic revival will certainly
change the scenario because Asian region definitely has a scope
for further growth in the petrochemical sector.
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