The Middle East’s booming downstream sector

Africa and the Middle East are projected to grow by 4.8 per cent in 2014, up from 3.6 per cent in 2013. With strengthening production volumes, global capacity utilisation will improve in the years to come.

For the petrochemicals industry in the GCC, it is forecasted that regional producers will add 5 per cent of additional capacity in 2014, reaching 151.5 million tons per annum. In total GCC producers are expected to add 7 million tons of petrochemicals capacity in 2014.

The majority of added capacity will come on stream in the UAE representing 70 per cent of the additional regional capacity in 2014, followed by the Saudi Arabia which expected to account for 30 per cent of the GCC’s added capacity.

In 2014, Saudi Arabia is expected to continue being the largest petrochemicals producer in the region accounting for 64 per cent of the total GCC petrochemicals capacity. With new capacity additions in the GCC, Saudi Arabia’s share in the regional petrochemicals capacity in 2014 is expected to decline marginally by 2 per cent compared with 2013.

Petrochemicals capacity in Saudi Arabia is expected to reach 96.8 million tons per annum by the end of 2013 which represent an increase of 2 per cent on Y-on-Y basis. This growth rate is lower than 2012 growth rate which was 12 per cent.

Qatar is the second largest producer in the region continuing to account for 15 per cent of the total GCC capacity. By the end of 2014, petrochemicals capacity is expected to reach 21.9 million tons per annum. After 11 per cent year-on-year growth in 2013, petrochemicals capacity in Qatar is projected to remain the same as in 2014.

UAE is expected to add 4.8 million tons of additional capacity in 2014 which will bring petrochemicals capacity in the UAE to 13.7 million tons. As a result of new capacity additions share of the UAE in the regional petrochemicals capacity will increase by 3 per cent from 2013 level to 9 per cent in 2014.

Year-on-year petrochemicals capacity growth of about 50 per cent in 2014 in the UAE is the highest in the region outpacing by far the regional capacity growth of 5 per cent.

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Kuwait is projected to account for 5 per cent of the regional petrochemicals capacity in 2014. Share of Oman in the regional petrochemicals capacity is expected to remain through 2014 at 6 per cent or 9 million tons.

From the industry’s products portfolio perspective, 2014 will not bring along significant change. Over the past years one third of the petrochemicals products produced in the GCC have been basic petrochemicals.

By the end of 2014, basic petrochemicals capacity in the GCC will account for 32 per cent. While continuing to account for the major share, basic petrochemicals are important building blocks derived from hydrocarbon feedstock and are used to produce other chemical products.

Fertilisers represent the second largest product group in the GCC petrochemicals sector. With demand for fertilizers increasing GCC producers are building up their capacities to fulfil this demand. In 2014 share of fertilisers in the total petrochemicals will remain at 22 per cent which represents 32.9 million tons per annum.

Growth of the GCC polymers capacity was one of the strongest among other products over the past years. In 2014, GCC polymers production capacity is expected to increase by 11 per cent to 27.4 million tons. Polymers growth in 2014 is highest among other product groups and stronger than in the previous year when regional polymers capacity grew by 4 per cent.

Looking ahead we expect improved gains in the global chemical industry production volumes and stable capacity utilisation rates next year, and with strengthening production volumes, capacity utilisation could improve even further in the following years.