The UAE is set to face a challenging year as it doubles output at the massive Borouge petrochemicals complex. The combination of an end to sanctions on Iran, a Chinese slowdown and Saudi Arabia's opening of its massive Sadara complex will work to keep petrochemicals prices low. Meanwhile, the UAE's dominant ethane feedstock will struggle to compete with falling oil-derived naphtha feedstock used by rivals in Asia and Europe.
The Gulf Cooperation Council (GCC) is seeing a slowdown in petrochemicals output growth, which fell to 7.5% in 2015 from 11% CAGR in 2004-2014, and is set to fall to 3.2% on average over the next five years. Constraints in gas supply have been blamed and this tightness in the gas market is leading to upward pressure on ethane costs.
Ethane availability and feedstock pricing will remain key to the growth of the UAE's petrochemical industry. Rising feedstock prices, limited ethane feedstock availability, increasing construction costs and the anticipation of slower demand growth in key markets are expected to lead to a decline in the number of new project announcements. A significant risk factor for the UAE's petrochemicals industry is its current reliance on naphtha feedstock.
In Q116, Saif Al Khaili Group awarded a construction contract to Nuberg Engineering for the USD76mn Emirates Chemical Factory, which will produce caustic soda and chlorine at the Khalifa Industrial Zone Abu Dhabi (Kizad). The chemical facility is due to open in 2017 with capacities of 22,900 tonnes per annum (tpa) of chlorine and 25,000tpa of caustic soda.
Chemaweyaat's complex will start up in 2018 and will include an olefins plant, an aromatics complex and a range of downstream polymer and chemical units. The first part of the development, Tacaamol, will use heavy naphtha feed for aromatics units and a lighter naphtha feed for a 1.5mn tpa mixed feed cracker. Tacaamol is expected to be the world's largest fully integrated grass roots chemical complex with capacities, aside from the ethylene unit, including 690,000tpa propylene, 950,000tpa polyethylene and 440,000tpa polypropylene.
In BMI's Middle Eastern Petrochemicals Risk/Reward Index matrix, the UAE has a score of 67.3 points, unchanged since the previous quarter following recent upward revisions. The score is supported by the increased use of lower-cost naphtha, which should help support margins. The country retains its second place in the Middle East and Africa RRI table, 8.8 points behind Saudi Arabia and 3.7 points ahead of Iran. However, it is facing a resurgent Iran with a huge amount of capacity coming onto the market with more competitive prices, which threatens to leapfrog it in the rankings.
The United Arab Emirates Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's United Arab Emirates Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Emirati petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Emirati petrochemicals market.
- Target business opportunities and risks in the Emirati petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in United Arab Emirates.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.