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Fri 4 Dec 2009 04:00 AM

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Chinese opportunities could dry up

The hopes of Middle East Petrochemicals producers hinge on the demand from Asia, and in particular the Chinese markets. When speaking to industry members, everybody is saying the same thing – our main market is the Chinese sector.

The hopes of Middle East petrochemicals producers hinge on the demand from Asia, and in particular the Chinese markets. When speaking to industry members, everybody is saying the same thing – our main market is the Chinese sector.

Additionally, companies such as
Petro Rabigh

, Yansab and
Kayan

, which are listed firms, describe China as one of the main destinations of their product. They also report that outlook for the future is bright and demand from the region is expected to hold steady, if not increase.

Petrochemicals consultancy firms are singing from the same hymn sheet, highlighting the increase in Chinese demand for petrochemical products.

However, while demand is growing, so will China’s production capacity. In order to boost the self-sufficiency of the country, China is naturally planning some major projects.

The new Tianjin project between
SABIC

and Sinopec is expected to produce 3.2m tonnes/year of chemical products. The huge Chinese demand for petrochemicals will partly be met by this project, which will go on stream in 2010.

Polymer players expect competition in the domestic market to intensify as a direct result of the Tianjin facility starting up. These companies will have to focus on the re-export segment of their customer base in order to counter this.

Producers in the Middle East would be best advised not to put all of their eggs in one basket. Other markets are out there, despite the fact that the Chinese one looks so appealing. And with massive Chinese projects coming online, it may not be the case for long.

Abdelghani Henni is the editor of Petrochemicals Middle East.

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