Central Asia Petrochemical Market Outlook 2014

Central Asia petrochemical industry is expected to boom starting from 2014 onwards. Already the continent boasts a few mega refinery-petrochemical integrated projects announced and more are expected to come. The countries in Central Asia have mostly fully recovered from the post-war and Russia influence from the late Soviet Union. 

Having domestic access to its abundant natural resources, central Asia is seen to be the new bridge between the geographical Europe (which includes Russia) and most of Asia. 

World's Biggest Company - It's Saudi Aramco and not Apple Computers!

Many of us when we think of world's biggest company we will picture Apple Inc. Some of us may also include ExxonMobil. To clear the air, the most valuable publicly traded company in the world, is indeed Apple. 

Since 2007, ExxonMobil has been playing chase and run with  ICBC, the Chinese government linked Bank. ICBC took the helm of the world's biggest company with asset figure from ExxonMobil in 2008. After that, the two companies have been switching the top spot. All of these companies are being publicly traded in the New York Stock Exchange making their asset figure public and known. ICBC took the helm as the publicly traded biggest company in the world in 2013.

Under the radar however, lies another story, by reserve asset figure, the world's biggest company is Saudi Aramco, due to its huge reserve of oil within Saudi Arabia. The company has existed for almost a century,

Top 5 Chemical Companies 2013

We are in the midst of end of 2013, and it is that time of lists and rankings. Who made it to the top 5.

Here is our first estimate on who will be on the top 5 Chemical Companies for the year 2013 based on the revenue estimate. This is preliminary list and will be updated after the closure of the financial account and release of information for the year 2013.

No 1 is still on the top spot, BASF.

Top 5 Chemical Companies for 2013 (estimated on total revenue):

1. BASF, Germany

2. Dow Chemical, USA

3. Sinopec, China

4. Saudi Basic Industries, Saudi Arabia

5. Shell, Netherlands

The top spot for the biggest logistic company for chemical industry is still Brenntag, Germany. 

Brenntag specializes in repackaging and distribution of chemicals to small and medium customers and hedging the fluctuations through its bulk purchase of the stock. It also has speciality in product mixing for special types of chemicals.

The Next Boom in Petrochemical Industry: Age of Abundance

Already many oil and gas analysts in particular in advanced petrochemicals are talking about the absurd "Age of Abundance" is coming. The next petrochemical boom will not be about producing the most petrochemical portfolio, integration upstream and downstream, but a focused new materials development which will require certain feedstock especially new plastics and resins and highly advanced nano-plastics.

The hype about the next petrochemical boom will largely be targeting the industry of computer science, supercomputer, 3D printing and media-related consumer goods. The combination of these industries will see

Market History: Top 20 Petrochemical Companies in 2012

As we are approaching the end of 2012, let's have a look at the list of top petrochemical companies. The list is for Dec 2011 year end, consolidated in 2012. BASF of Germany maintains its top position of top spot for biggest petrochemical company in the world followed by Sinopec which slightly topples Exxon Mobil for a second place.

Global Ranking	Petrochemical Company	Revenue in US$ Million for 2011
1	BASF	95,245
2	Sinopec	65,752
3	Exxon Mobil	64,731
4	Dow Chemical	59,985
5	Lyondell Basell Industries	51,035
6	SABIC	50,636
7	Shell	46,963
8	Mitsubishi Chemical	38,713
9	DuPont	37,961
10	INEOS	27,529
11	Total	26,839
12	Bayer	24,975
13	Sumitomo Chemical	23,505
14	Akzo Nobel	20,342
15	LG Chem	19,580
16	Johnson Matthey	19,252
17	Toray	19,170
18	Air Liquid	18,735
19	Evonik	18,308
20	Linde Group	17,867

Iran is Expecting New Petchem Plants

Hamidreza Seyyed Jafari, the corporate planning director of the National Iranian Oil Refining and Distribution Company (NIORDC), is quoted to have mentioned that new petrochemical plants, targeting to produce propylene-chain will be launched at the refineries of Imam Khomeini, Shazand and Isfahan.

Iran is expecting to churn out as much as $14 Billion of petrochemical export revenue by 2012.

Most of the products are second level derivatives such as polyethylene, methanol, benzene, ammonia, sulphur and PVC.

It would be interesting to note that United States is currently fighting for a sanction and trying to get Europe on table on Iran.

Dim Outlook on Iran's Petrochemical Sector

Iran's Petrochemical sector is expected to be badly affected by the recent announcement by the US Government to impose yet another sanction. This time it is specifically targeting Iran's petrochemical industry.

The sanction can be as soon as next Monday.

Iran has responded that it is largely a political motive by the IAEA and the United States in accusing Iran of having nuclear power. European countries are expected to follow suit, but not immediately, especially during these times as the bloc is fighting its own economic turmoil and companies with roots in Europe are feeling nervous.

Further sanctions will hurt the companies having business deals on the petrochemical industry with Iran.

Higher Plastic Usage in Cars to Increase Demand of Plastics

The global car industry sees jump in cars demand as rising economies in China and rest of Asia sees increase in middle class population. China has already surpassed Japan for largest automotive producer and close to overtaking US as the largest automotive market.

Engineering polymers which widely used in the cars production is expected to increase from 18% to 25% per car as the auto sector scouting for means for weight savings to enhance fuel efficiency and costs.

Malaysia Stock Market Boost with Oil Companies Participation

Malaysian stock market, KLSE or locally known as Bursa Malaysia is getting a boost after the Malaysian's national oil and gas participation in listing of its subsidiaries and companies on the stock exchange. PETRONAS who will have six of its units listed on the Bursa Malaysia will be controlling 10% of the Malaysian stock market based on value.

It's latest listing is an IPO for its petrochemical group, Petronas Chemical Group (PCG). The listing of Petronas companies is seen as politically driven after announcement from Petronas Prime Minister, Najib Tun Razak for more private sector participation.

Malaysia Petrochemical Plant and Outlook to Change

With the upcoming release of IPO from Malaysia's biggest petrochemical player in the country, Petronas, the horizon of Malaysian's petrochemical industry is set to change.

Currently, petchem industries in Malaysia has its joint ventures with multinational companies, normally the technology providers such as Shell, ExxonMobil, Kaneka, BASF, Dow Chemicals, ConocoPhilips and others.

The petchem scenario is considered medium matured with investments of RM28 billion in the sector producing 39 types of petrochemical products such as olefins, polyolefins, aromatics, ethylene oxides, glycols, oxo-alcohols, exthoxylates, acrylic acids, pthalic anhydride, acetic acid, styrene monomer, polystyrene ethylbenzene, vinyl chloride monomer and polyvinyl chloride. World scale petrochemical plants producing LDPE, LLDPE, HDPE, PP, EPS, GPPS, HIPS, PVC, ABS, SAN and PET resins have spurred the plastic industry in the country.

There are three petrochemical zones in Malaysia which are Kerteh, Gebeng and Tanjung Langsat.
With Petronas consolidating most of its petrochemical plants in Kerteh, and some in Gebeng and other areas, it is expected that the level of playing field will be raised with increase in efficiencies and cost cutting measures. This will in turn, give better profits to its shareholders which will be opened to public soon.

Malaysia’s petrochemical sector has also contributed to the development of local downstream plastic processing activities.

India 2010 Outlook: World Fastest Growing Economy Exceeding China by 2013

The global market changes constantly and by 2013, China will no longer hold the throne of the fastest growing market. China is expected to grow by 9% in 2012 down to 8% in 2015 while India is expected to have growth rate by 9% in 2013 up to 9.5% in 2015.

Much of the growth is expected to come from its demographic since India has one of the lowest median ages among the major economies with high percentage of young working age population which can contribute to the country's growth.

This is coupled to the fact that globalisation permits high opportunities for job placement either inside or outside the country which can increase the domestic savings.

New Chemicals Anti-Dumping from Indian Government

The Indian government has imposed an anti-dumping duty policy which will be affecting chemical products used for toys manufacturing and adhesives with anti-dumping values of as much as US$608.57 per tonne.

The radical step was taken in a combat to safeguard the local industry against cheap imports from seven countries, Japan, Korea, Malaysia, Russia,Taiwan, China and Thailand claimed the Indian Government.

Anti-dumping is seen to protect the local producers which is an endorsed tool by WTO (World Trade Organization). India has seen an increased to 19,020 tonnes in 2008-09 from 3,636 tonnes in 2005-06 from the effected seven nations.

Global Warming May Hinder Petrochemical Outlook

Asian industry leaders are skeptical on the petrochemical outlook in the near future from increase pressure of environmental concern in particular global warming. Japan Petrochemical Industry Association (JPCA) chairman, Kenji Fujiyoshi was urging the industry players to re-look at energy effectiveness and improvement via reusable energy.

Two identified areas are methods for naphtha cracking, where major petrochemical feedstocks are coming from as well as fossil fuels substitutes. Currently there has been a few successful direct alternatives of petrochemical products that using 100% alternative feedstock other than fossil fuels.

It is expected that the trend will continue to grow in 2010, coming mostly from already popular agriculture products such as corns and palm oils. Other growing technologies include bio-glycerol such as ones for propylene oxide production.

Mergers & Acquisition (M&A) for 2010 Outlook - Oil & Gas

It is a sign of recovery for the oil and gas outlook where merger’s & acquisition (M&A) value in Upstream oil and gas industry is estimated at $46 billion for the year of 2010. In 2009, this value was catapulted to $153 billion.

In 2009, most of the buyers for the M&A came from National Oil Companies representing 50% of all deals greater than $1 billion in 2009 and similar trend is forecasted for 2010. International oil companies like ExxonMobil however, took the unconventional route with assets acquisition of $41 billion purchase of U.S. independent XTO Energy. China lead the M&A game in 2009 with similar prospect expected for 2010.

It is expected for 2010 that M&A activities will revolve around risk management for current portfolio balancing; venturing into new projects with shared risks and for better management of current resources.

Improving Economy Boosting Oil Demand

The International Energy Agency had revised its forecast for world oil demand on improved Asian economic activity however most likely will still be offset by countries like Russia who are pumping more crude than the added rise in consumption.

The agency which is based in Paris revised the forecast to 83.94 million barrels a day. The world is still having a huge reserve of oil supply with non-Organization of Petroleum Exporting Countries producing more supply than previously expected. Russia, the world's biggest oil producer churns out a total of 360,000 barrels a day as new fields being developed in Western Siberia and enhanced oil recovery techniques are used to squeeze out more hydrocarbons from existing fields.

Despite current projection, some analysts think Russia will pump around 9.7-9.8 million barrels a day on average this year rather than 10.07 million barrels a day as expected by the IEA with global crude demand to rise 1.6% next year outpacing non-OPEC supply growth of about 1% in 2010.

Countries like the U.S which is the biggest consumer for oil and energy has 8 days higher average on its inventory which stands at 61.7 days this year. China has indicated a move to follow the same lead.

Floating USD20 Billion of Oil & Gas Assets

Derrick Petroleum Services in their comprehensive study of the Top 1000 global oil and gas companies has identified that as much as $20 billion of oil and gas assets excess currently for sale worldwide. The whole assets are currently floating through 69 separately announced transactions.

Derrick estimation only takes into account deals with value greater than $10 million with North America leading the inventory with over $9 billion followed by Africa (22%), Europe, South America, Asia, Australia and Middle East.

Some of these assets could worth more due to their potential in future discoveries such as Devon Energy's offer for its four discoveries (Kaskida, Cascade, Jack and St. Malo) in the deepwater Gulf of Mexico.

It is interesting to note that most of the potential buyers are Middle Eastern and National Oil Companies compared to the usual Western investors and public listed companies.

Japanese Economy Taking Hit

Japan, who has been prone to deficit for nearly 30 years is experiencing its first deficit indicating the economy trouble wave is rippling towards Japan. Japan posted a trade deficit of Y725.3bn in fiscal 2008. However, the government of Japan is confident that the economy is in its state for a rebound especially in the indsutrial production and exports. The petrochemical industry in the country is yet to see a clear signs of rebound and the industry is now in wait and see situation.

Petchem Overcapacities Expected

Petchem industry is feeling the pinch as industrial analysts are worrying on overcapacities including Bayer CEO in the recent interview. The financial crisis has turned the chemical and plastics industry into a huge overcapacities at least for 2009 and 2010 petrochemical outlook.

The mostly hit industry is plastics and polymers business used in the auto industry which is not building a huge industry overcapacities and inventories. Bayer CEO also predicted that growth in Bayer's pharmaceuticals and crop chemicals businesses to be much affected in 2009.

Petrochemical Industry Getting Worse: BASF

As the economy downturn is getting worse, most of the petrochemical companies are not seeing the bottom-out yet; or signs of recovery for their petrochemical business, at least not from BASF. As BASF CEO CEO Jurgen Hambrecht, put it, BASF is not expecting a growth for 2009, worse still is expected to shrink.

To date, as much as 25% of BASF operating units worldwide have been shut down or idling due to uneconomical route of production especially in North America and Asia Pacific. Most of BASF's units are to make coatings, performance plastics, electronics and intermediates which are taking toll due to significant dropped in automatives and construction business.

BASF is expecting that more operating units will be closed and possible of job cuts; especially for units not serving the crops, hygienes and oil & gas industry. The plastic business seems to be taking the strongest hit so far.

Malaysian Biodiesel Sold Out

Mission New-Energy, an Australian firm  which has a stake of 100 kmta of biodiesel plant at Malaysian port of Kuantan told the press that all of the potential production is already sold out in 2009. Mission is now on its way for a second palnt which will be able to produce an extra of 250 kmta of biodiesel.

The second plant project has been delayed in construction for many months due to technology switching. Despite the global economic turmoil, Mission Energy has able to sell all of 2009 contractual production to a major global oil and biofuels player for a cost-plus-margin basis protecting it from the volatility in commodities markets.

The recent huge price drop in biodiesel last year had pushed many biodiesel producers to the brink of collapse.