Industry analysts offer plastics predictions for the Middle East

With relatively inexpensive raw materials at hand, manufacturers in the Middle East could place themselves among the world’s leading plastics producers within a few years, according to industry analysts.

By the end of the decade, suppliers based in the Middle East could control about 20% of the world’s polyethylene (PE) production (compared to 1% in 1980) and 11% of the world’s polypropylene (PP) output (which wasn’t even a footnote in 1980 stats).

This evaluation was provided by Horst Maack, president of plastics consultancy MBS (Au, Switzerland), who spoke at the Dubai Plast Pro 2007 conference. Total capacity of Middle Eastern-produced thermoplastics (including PE, PP, vinyl, polystyrene, and polyester) is 7% today but in three years will reach 11%, he predicted.

One leading plastics supplier, Sabic, based in Riyadh, Saudi Arabia, has had limited competition in the region for years. But it is now facing new, privately financed competitors, including Tasnee/Sahara, Sipchem, APPC, and ventures with both Dow Chemical, and Japan’s Sumitomo and Saudi Aramco, Sabic’s primary supplier. That move did not sit well with Sabic, according to industry sources.

One consultant speculated that despite the current row between the two, both Saudi companies might nonetheless put their differences aside for a potential merger to protect existing markets. Husain noted that investments that previously—prior to the Sept. 11 attacks and the attempt by Dubai Ports to acquire U.S. harbor interests—would have come from U.S. entities, are now being invested in new, local plastics producing operations.

Several Middle Eastern processors at the conference said the threat of low-cost imports from Asia is forcing them to target more value-added applications. Dubai-based film processor Nova Industries offered a warning about a price drop coming as early as 2008.

Another company that produces 3-layer, 8m-wide blown-film geomembranes said it envisions a big market for this material, given a growing market for local groundwater reservoir projects, landfills, and mining heaps for the new phosphate, sulfate, and gold industries in Saudi Arabia. Previously, all geomembranes had to be imported. Arno Johansen, an application marketing manager at Austria-based Borealis, a polyolefins and thermosets producer, said geomembrane demand in the region is growing at 6% per year.