Plastic players gather at ChemOrbis 6th Asian Petrochemical Conference

ChemOrbis’ sixth annual Asian Petrochemical Conference was held on June 10, 2015 at the Kuala Lumpur Convention Center in Malaysia. The event was attended by more than 300 professionals representing nearly 200 companies.

The conference opened with a presentation from Mr. Akbar Md. Tayoob, Chief Executive Officer of Pertronas Chemical Marketing (Labuan). Discussing the challenges and opportunities facing petrochemical companies in the ASEAN region, Mr. Tayoob commented that high feedstock costs, problems finding human talent and the potential of more onerous regulations are among the most serious threats facing petrochemical producers in ASEAN. On the other hand, Mr. Tayoob noted that regional players are well positioned to take advantage of the upsurge demand expected to come from emerging markets in Asia over the next few decades, predicting that the Asian middle class might number as high as 5 billion people by 2030.

The next presentation came from Mr. Necmettin Kaymaz, Chief Project Director at Turkey’s Investment Support and Promotion Agency. Highlighting the importance of emerging economies in future economic growth, Mr. Kaymaz stated 70% of global growth over the next five years is expected to come from emerging and developing economies, adding that the emerging middle class in Asia will be on the key drivers in global GDP growth over the next five years.

Mr. Andrew Lee Fagg, Principal at Nexant Asia, gave the next talk focusing on how changes in feedstock markets will affect the petrochemical industry. Mr. Lee Fagg indentified Indonesia, the Philippines and Vietnam as countries with strong growth potential in per capita polyolefin consumption while noting that these countries are starting from relatively low bases. Regarding advantaged North American ethane feedstocks, Mr. Lee Fagg said that the cost advantage of North American producers will be lessened if lower crude oil prices persist while adding that US ethane will soon be utilized as a cracker feedstock in Europe and India as export channels are developed out of the US.

Mr. Mazlan Razak, Managing Consultant at Nexant Asia, followed up with a presentation about shifting trade patterns for polyolefins. Mr. Razak predicted that North America would triple its PE exports from its 2014 total of 1 million tons by 2020 and that the US would become a major PE exporter to Western Europe and Asia while also retaining its strong presence in Latin America. For PP, Mr. Razak predicted that the Americas along with Africa would become the world’s largest importers of PP as China is set to become increasingly self-sufficient in PP production.

The next presentation came from Mr. Mark Mirosevic-Sorgo, Managing Director at Quincannon Asia Pte Limited. Mr. Mirosevic-Sorgoe noted that ethylene requires special carriers and that the cost of construction an ethylene carrier ship is around 10% higher than constructing a normal carrier vessel. Mr. Mirosevic-Sorgo added that Iran has invested $60 billion in ports and ships while under international sanctions and that the country could become a more important global player if sanctions are lifted.

After that, Ms. Weili Chen, Research Analyst, Olefins & Polyolefins at Wood Mackenzie Chemicals spoke about changing ethylene and propylene supply patterns in Asia. Ms. Chen said that China would remain heaviliy dependeant on imports of ethylene and ethylene derivatives while adding that Asian producers will struggle to remain competitive will producers from advantaged feedstock regions such as the Middle East and North America. Regarding propylene supply, Ms. Chen predicted that Asian propylene markets could face oversupply following the current massive build-up in PDH capacity, adding that this may keep propylene prices depressed relative to ethylene prices in Asia.

Mr. Kambiz Mirkarimi, Commerical Director at Jam Petrochemical, gave the next presentation entitled, “Iranian Producer’s Perspective: Nautral Business Partners.” Mr. Mirkarimi stated that Iran’s domestic petrochemical more than double from 2009 to 2014, rising from 7.9 million tons to 16.1 million tons. However, the country also increased its petrochemical exports over the same period and exports are set to further increase once international sanctions are lifted. To meet this expanding demand, Iran is set to add 4.3 million tons/year of new PE capacity and 750,000 tons/year of new PP capacity over the next three years.

The final session of the conference opened with a presentation on the PET and polyester chain from Mr. Rajen Udeshi, President of the Polyester Chain at Reliance. Mr. Udeshi identified India as a country with tremendous room for growth in PET consumption, noting that India’s per capita PET consumption per capita currently sits at 0.55kg per year, well below the global average of 2.63 kg. Mr. Udeshi predicted that water and carbonated soft drink packaging would be the primary drivers of global PET demand over the next five years, predicting that these segements would see average annual growth of 7% and 5%, respectively.

The conference closed with presentation from Mr. Frank Ye, Partner at Chem1 Consulting, who spoke about Asian PVC markets while paying particular attention to China. Mr. Ye said that PVC pricing in China is based primarily on the price of coal and that crude oil prices do not have as strong an effect. Mr. Ye said that China faces an oversupply of around 10% for PVC, requiring the country to seek out export opportuntities. However, as difficulties such as the recent anti-dumping duties imposed by India are limiting the outlets for Chinese PVC exports, average operating rates in the country have fallen to around 50-60%.