2009-08-27 12:07:01 -
Qatar Petrochemicals Report Q4 2009 - a new market research report on companiesandmarkets.com
www.companiesandmarkets.com/Summary-Market-Report/qatar-petroche ..
The overwhelming optimism over the rapid growth of Qatars petrochemicals industry has dissipated somewhat in the face of the global financial crisis and the downturn in Chinese demand, but the latest Qatar Petrochemicals Report argues that the countrys competitive advantage will ensure current projects go ahead, albeit with delays of one to two years.
Trends in Qatari petrochemical production are closely tied to its key export markets, notably Asias economic powerhouse China. A deterioration in Chinese economic conditions has put pressure on demand both in China and other Asian markets. It is believed that demand for petrochemicals will have improved in H209 following some difficult months which have seen a sharp slowdown in construction activity. This will be supported by the
governments economic stimulus programme. Although H209 will be an improvement on the poor performance seen in H208, levels of demand growth are not forecast to return to 2007 levels until 2010 at the earliest. However, there are fears that the Chinese governments stimulus plan for petrochemicals, which is set to involve investment in new refineries to speed up their construction, could create a problem of short-term over-supply in Qatars export markets in Asia. Much will depend on the strength of the recovery in the automotive and home appliance sectors, which are expected to recover before the construction sector.
Qatars strength lies in its cheap feedstock, the size of its units and the high level of integration, which make it more economical and competitive. Nevertheless, the addition of large amounts of capacity at a time of economic downturn in key markets such as China could mean that Qatari facilities run at lower rates than operators hoped. Some figures put excess olefins capacity at up to 30mn tpa, which is five times more than during previous downturns. Despite the threat this poses to Qatari profit margins and planned projects, BMI still believes Qatar is better placed than most other petrochemical-exporting countries.
Doubts are emerging over planned projects after a decision by QP and Honam Petrochemicals to delay their US$2.6bn plant by one year. Previously, it has been reported that the project would be delayed until 2012, due to problems securing finance. Reports have now emerged that the project will be delayed until early 2013. There were concerns that it may not go ahead at all after the partners said they were putting the plans on indefinite hold. The cornerstone of the complex was to be a cracker with capacity of 1mn tpa of ethylene using mixed feedstock, with other capacities including 900,000tpa of propylene, 700,000tpa of PP and 220,000tpa of PS. The partners have declared they are still planning to complete the project, but BMI is highly cautious and mindful of Honam Petrochemicals own problems with rising losses, although it has little or no debt.
Meanwhile, a number of other projects have overrun their target start dates. Others are still under discussion, but the tightening credit market, threat of over-capacity in the global petrochemicals markets and concerns that Qatar will not have enough feedstock to justify such megaprojects have dampened the previously positive prospects for the Qatari petrochemical industry. The Qatofin/Q-Chem 1.3mn tpa ethylene cracker at Ras Laffan has been pushed forward to the latter half of 2009, with resulting knock-on effects for other projects. The Q-Chem II PE complex, which was expected to be onstream in H208 with capacities of 350,000tpa HDPE, 345,000tpa normal alpha olefins and 1.3mn tpa ethylene, may only start in H209. Qatofins PE complex, with 450,000tpa LLDPE capacity, missed its scheduled Q109 start-up and now looks unlikely to come onstream before Q309. The Qapco PE plant, with 250,000-300,000tpa of LDPE, is also unlikely to be completed before 2011, a year behind schedule. Discussions of further petrochemical development projects, still in the discussion stage, have slowed and could be abandoned.
