This year, BMI has said that Azerbaijan is going to move forward with plans to expand its petrochemicals sector, boosting the country’s non-oil sector in the medium term. The industry does however remain volatile and has been unable to meet domestic demand. In the first half of this year the country produced 38 500 t of polyethylene (PE), according to BMI, a drop of 11.8% year on year. The country’s total PE output is now expected to stand at 80 000 t which is much lower than the government set target of 107 000 t. BMI believes this implies that the petrochemicals sector in Azerbaijan is currently running at lower than two thirds of its total capacity.
BMI has said that in the medium term Azerbaijan will be focussing on the SOCAR OGPC, a project which will have a complete processing capacity of 10 – 12 billion m3 and a refining capacity of 10 million tpy. The complex is expected to come online in 2018. The facility will also have a petrochemical capacity with the ability to produce 700 000 tpy of high density polyethylene (HDPE) and low density polyethylene (LDPE), 550 000 tpy of polypropylene (PP), 40 000 tpy of benzene and 110 000 tpy of styrene.
Even though petrochemicals output in China has grown recently, BMI anticipates market conditions to worsen in key sector. This will be due to a slow down in the country’s economy and falling consumer demand, according to BMI.
For the first seven months of this year, BMI reported that ethylene output increased to 9.96 million t, an increase of 6.2% year on year. The overall increase in plastics and petrochemicals output has been attributed, by BMI, to a rising capacity utilisation as new plants come online. Under the most recent five year plan, China is looking to increase self sufficiency with regards to ethylene and derivatives to more than 64% by 2015. Also, the country’s polyethylene industry is expected to remain the dominant consumer of ethylene representing 60% of current demand.
BMI has drawn a comparison between the development of the Indian economy as a whole and the petrochemicals sector. BMI has said that the Indian economy is developing unevenly and this is being mirrored by the petrochemicals sector where capacity is surging in the west and north but major concerns are appearing surrounding projects in the east, specifically at Haldia Petrochemicals Ltd (HPL) which is causing concerns for downstream producers as if the plant’s situation were to worsen, many downstream units would have to close and the gap in the market cannot easily be filled, in the eyes of BMI.
For this year, an almost 1 million tpy increase in PE capacity is expected and PP capacity is expected to increase to levels above 5 million tpy for the first time. By 2018, BMI expects ethylene capacity to be at approximately 10 million tpy, PE at 6.37 million tpy and PP at 6.26 million tpy.
BMI has said that strong growth in capacity for Indonesia’s petrochemicals sector will improve the country’s self sufficiency, but a certain level of imports will be needed to satisfy domestic demand. Also, BMI has said that the country’s reliance on naphtha as a feedstock could have problems competing with ethane based producers in the Middle East and USA as their costs are lower.
Over the next five years in Indonesia, BMI anticipate ethylene capacity to increase by 1.38 million tpy. This will help sustain a production capacity in the country of 800 000 tpy of extra polyethylene and 700 000 tpy of ethylene glycol by 2018. Also, BMI has said that as new crackers and propylene units come online at refineries, there will be enough feedstock for the country to produce 150 000 tpy of polypropylene.
The domestic market for petrochemicals is forecast to slow down in its consumption growth levels compared to previous years, but a contraction in the market is not anticipated.
Edited from report briefs by Claira Lloyd
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