Highlights from ChemOrbis’ Egypt Petrochemicals Conference

ChemOrbis’ Egypt Petrochemicals Conference took place at the Fairmont Nile City Hotel in Cairo on August 30, 2016 with the participation of key market players from both Egypt and the region. The event provided networking opportunities to the attendees during several coffee breaks, an open buffet lunch and a networking cocktail.

Presentations were made on crucial market topics including feedstock competitiveness following declines in global oil prices, new capacities including new coal to olefins capacities, and analysis of the Egyptian market.

The conference opened with a presentation entitled "Global Feedstock Competitiveness Assessment" by Andrew Ballard from Nexant. Ballard touched on the changing dynamics in feedstock competitiveness following declines in crude oil prices. According to Ballard, the fall in oil price has improved the competitiveness of naphtha cracking versus lighter feedstocks. The narrowing gap between naphtha and ethane makes it viable to switch back to naphtha.

Ballard also added that Western European companies seek to import ethane from the US, albeit margins are less favorable after the decline in naphtha prices. INEOS’ ethane shipments from the US to its Grangemouth site in the UK are set to begin in the last quarter of this year while the company has already begun shipments to its Rafnes site in Norway in March. SABIC also switched to using ethane/LPG at its Wilton cracker in the UK. Plus, Versalis decided to import ethane from the US and convert its naphtha cracker to mixed feed.

Following Ballard, General Director of Plastribution UK, Mike Boswell talked about the role of distributors in the polymer markets and gave some information about the distribution channel. Boswell opined that the role of distributors in the supply chain is increasing, therefore, business models will need to evolve to meet changing market conditions.

Regarding the polyolefin markets and capacity expansions in the Middle East, Gilles Rochas from Oman Oil Refineries and Petroleum Industries Company (ORPIC) said that the Middle East is the biggest exporter of PP today, with most of the exports heading to Northeast Asia. He also added that global PP demand will grow at a 4.5% rate over the next decade while PE will grow at a faster pace during the same period. This is due to stronger demand from Asia’s top PE export destinations; China, Singapore and India. Rochas stated that Oman will add one third of new PP capacity by 2020.
Rochas also gave 5 key supply trends that need to be analyzed to better understand future scenarios for trade deficits: China’s coal to olefins expansion, petrochemical exports from the US due to cost advantaged shale gas, rationalizing of EU cracking capacity, Iran’s return to the market and emerging PDH capacities.

Hussein Soliman from Dow Chemical Packaging and Specialty Plastics made a presentation about the innovative solutions to improve packaging sustainability, to reduce the food waste and improve packaging integrity as well as to reduce energy use.

The afternoon sessions opened with the presentation of Dr. Tarek Zaghloul from OPC. Zaghloul talked about consumption, demand, import and export dynamics of Egypt’s PP market. Following Zaghloul, Ahmed El Hawash from SIDPEC noted the existing and future capacities of Egypt and efforts to exploit hydrocarbon resources to produce added value petrochemical products. He also gave some information about PE investments in Egypt, including Ethydco and Carbon Holding’s petrochemical project, Tahrir Petrochemical in Suez Canal.

Moataz Ismail from TriChem Foreign Trade said that American PVC maintains its competitiveness on the back of cost-advantaged natural gas and fully integrated plants producing EDC, VCM and PVC. He also added that they shale gas revolution led to substantially lower electricity costs in the US. Electricity costs in Europe are more than two times higher, said Ismail.

Lastly, during his presentation entitled “Global Styrenics: Creating value for a better future”, R. Rangarajan from Supreme Petrochem commented that the global PS market has experienced a slow down over the past five years, adding that the largest market for PS, the packaging segment, faces competitive pressure from alternative cheap materials like PP and PET-G while the electronic and appliance segment will be the main drivers for PS though serious competition with ABS.