Market Report, "Kuwait Petrochemicals Report Q2 2016", published

From: Fast Market Research, Inc.
Published: Tue Feb 16 2016

As an export-oriented sector, Kuwait's petrochemicals industry will be highly dependent on external markets, particularly Asia. The global market downturn is affecting strategic decisions by the sector. Karo was looking to develop its production facilities and improve the performance and flexibility of its aromatics complex and Petrochemicals Industries Company (PIC) is examining the viability of more aromatics plants. However, there has been no further progress on these plans.

Externalities will be crucial to the performance of the Kuwaiti petrochemicals industry and unless the industry sustains a competitive edge, it will suffer diminishing margins on production. While the predominantly naphtha-fed sector has taken advantage of the recent decline in crude prices, it may struggle with the surge in output from Iran following sanctions relief as well as low-cost output from US shale-fed producers. Yet, it still has better prospects than most petrochemicals producers in the Arabian Gulf.

Full Report Details at

The key downside risk factors in 2016 will be the Chinese economic slowdown at a time of sustained growth in Chinese basic chemicals production. At the same time, Iran will be ramping up production for export following the lifting of sanctions. On the upside, there will be tightened markets in Northeast Asia due to shut-downs and maintenance turnarounds, along with growing demand in India. However, on balance the risks are more to the downside.

The Al-Zour project was set to raise downstream refinery capacity to 1.4mn barrels per day by 2019, but it looks set to be delayed until 2020 as costs escalate and Kuwait continues in its effort to secure financing. In the meantime, refining capacity is set to decline as a result of consolidation within the refining sector, a move that could restrict naphtha supply to petrochemicals and raise feedstock costs.

By 2020, ethylene capacity should reach 3.1mn tonnes per annum (tpa) and polyethylene should top 1.8mn tpa. In addition, mono-ethylene glycol is set to rise from 1mn tpa to at least 1.6mn tpa.

Kuwait scores 58.7 out of 100 in BMI's Petrochemicals Risk/Reward Index, down 0.2 points since the previous quarter as a result of economic stagnation and increased competition with Iran's petrochemicals industry. The country remains in fifth place out of 11 countries monitored in the Middle East and Africa, 1.5 points ahead of Israel and 0.8 points behind Qatar. However, Kuwait still has the potential to rise up the regional ranking if it can revive its economic fortunes and beat Qatar in the competitiveness stakes.

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You may also be interested in these related reports:

- Saudi Arabia Petrochemicals Report Q2 2016
- Israel Petrochemicals Report Q2 2016
- Qatar Petrochemicals Report Q2 2016
- Algeria Petrochemicals Report Q2 2016
- Iran Petrochemicals Report Q2 2016

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