ChemOrbis 4th Turkey Petrochemical Conference: Where will Mid-East PP go when China becomes self-sufficient?
Lines questioned the possible competitiveness of the Middle East now that other regions like China and the US have also started to enjoy advantaged feedstocks. Lower oil prices also resulted in a significant improvement in naphtha cracking competitiveness. New investments in the Middle East will switch to heavier feedstocks due to improve naphtha cracking economics and reduced availability of gas in the Middle East, thereby diversifying its production. The portion of ethane based production will fall below 50% while propane and butane production will be raised by 2020 in the Middle East. The region will also need to focus on integration and more exports.
Following the start-up of new PP capacities in China, Mr. Lines forecasted that China will be self sufficient in PP by 2020. Lines then asked the question of where the Middle East will divert its exports. According to Nexant’s forecast, the first destination will be Turkey and the market share of West European producers will be downsized, which will eventually result in plant closures or consolidations across Europe.
Evaluating the rising influence of Iran in the Middle Eastern markets, Lines estimates that it will take 3-4 years, starting from 2016, for the Iranian petrochemical industry to return to the same production levels as pre-sanctions.
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