Newly released market study: Qatar Petrochemicals Report Q3 2016

From: Fast Market Research, Inc.
Published: Tue Jun 14 2016


The effects of the US shale gas revolution, low oil prices, high construction costs, China's self-sufficiency and the lifting of sanctions on Iran are all downside risks that are likely to prevent Qatar from capitalising on its indigenous resources.

In 2015, expansions in Qatar's plastic industry increased the country's regional market share to 8% of the total in the Gulf Cooperation Council, according to the Gulf Petrochemicals and Chemicals Association (GPCA). However, with prominent planned projects now postponed or cancelled due to adverse market conditions, its position in the region is set to fall back, with Oman seeing strong growth, the UAE adding to its already massive petrochemicals facilities and Saudi Arabia consolidating its lead.

China and India represent the largest markets for Qatar's polyethylene output, but exports to these Asian economic powerhouses are under pressure and the country's petrochemicals industry needs to diversify if it is to defend its profit margins. The prospects for the industry will therefore be determined primarily by the trends in the volatile and uncertain European markets. BMI believes the upshot will be pressure on Qatari margins and potentially lower production volumes, possibly leading to turnaround schedules being moved forwards.

Full Report Details at
- http://www.fastmr.com/prod/1182886_qatar_petrochemicals_report.aspx?afid=301

Sanctions relief on Iran pose another threat as Iran is likely to emerge as Qatar's main competitor. However, Qatar's petrochemicals industry is more advanced in its development than Iran, and does not have the ramifications to investment - bureaucratic or infrastructural constraints - associated with Iran.

There are also multiple risks facing Qatari fertiliser production, which is growing at a far higher rate than global demand growth. In this market, Saudi Arabia will represent a significant regional competitor in export markets, leveraging its competitive advantage in gas. India's move towards fertiliser self-sufficiency will also pose a challenge in Asian markets.

Although the country possesses plentiful natural gas reserves, the decline in the naphtha-ethane spread and high capital costs have made new Greenfield world-scale complexes commercially unfeasible. Plans are afoot to look at utilising the available ethane, but with no details on capacity or schedule, we have not included any further expansion in our five-year forecast.

Qatar has fallen to fifth place in our Petrochemicals Risk/Reward Index for the Middle East and North Africa region this quarter as a result of a 1.8 points decline in its RRI to 57.7 points. The downward revision is the result of project cancellation and doubts over the viability of expansion plans, in addition to the effects of the ongoing narrow ethane-naphtha spread that is posing problems for competitiveness. It now lies 0.5 points ahead of Israel and 1.0 point behind Kuwait.

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- Israel Petrochemicals Report Q3 2016
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