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Turkey Petrochemicals Report Q2 2011
Business Monitor International, Feb 2011, Pages: 47
Business Monitor International's Turkey Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkey's petrochemicals industry.
The development of the Turkish petrochemicals industry is set to proceed rapidly over coming years, with strong growth in demand in the short term and capacity set to double by 2018, according to BMI’s latest Turkey Petrochemicals Report. The State Oil Company of Azerbaijan (SOCAR), part of the consortium that took over Turkish petrochemicals producer Petkim in 2008, plans to invest US$10bn over the next seven to eight years in the company’s operations.
The rapid growth of domestic demand for petrochemicals, related to the country’s burgeoning manufacturing activity, will support increases in capacity. Petkim claimed to have broken a production record in 2010 with its highest level of output in its 45-year history. While petrochemicals producers elsewhere in Europe and the Middle East were struggling with low operating rates, the company reported a 98% capacity utilisation rate throughout the year as it surpassed its turnover and profitability projections. A strong oil market accompanied by improved technology, productivity and new production lines assisted with the company’s growth.
Petkim aims to double in size by 2018 with a new olefins complex and downstream units planned as part of its investment programme. Refinery construction at Aliaga is due to start in H111 with completion in mid-2014, providing all the company’s naphtha feedstock requirements. The US$4.5bn plant will have processing capacity for 10mn tonnes per annum (tpa) of crude oil with production including capacity for 2mn tpa of naphtha as well as liquefied petroleum gas, diesel and jet fuel. Petkim will continue to import 90% of its naphtha needs until the refinery comes onstream in 2014. Petkim also plans to increase capacity at its existing petrochemical complex in 2011, raising ethylene capacity by 80,000tpa to 600,000tpa. The company plans to raise capacity at its tubular LDPE plant by 20% to 145,000tpa. Its target is to increase gross production from 3.1mn tpa to a minimum of 6mn tpa by 2018. A planned ethylene unit will double olefins capacity at the complex. Petkim is also planning to introduce products to its slate that will be made for the first time in Turkey.
In 2010 Turkey’s ethylene production capacity remained unchanged at 520,000tpa, providing feedstock for plants with capacities of 140,000tpa ethylene dichloride, 100,000tpa ethylene glycol, 80,000tpa ethylene oxide, 100,000tpa HDPE and 310,000tpa LDPE. Turkey has capacities of 150,000tpa PP, 150,000tpa VCM/PVC capacity, 140,000tpa PTA, 135,000tpa benzene and 80,000tpa PS. BMI believes that by Q211, Turkish consumption levels should be back to pre-recession levels. However, exports to the EU will be crucial to sustained growth in Turkish demand for petrochemicals. Converters supplying to the export-oriented automotive and consumer goods industries will increase demand for basic plastics. Strong manufacturing growth indicates considerable resilience of the Turkish export sector in the face of fiscal austerity programmes initiated in Europe and appears to brush off concerns of an unwinding of inventory restocking cycles in OECD countries. With overall exports expected to grow 6.5% in 2010, Turkey's high dependence on European demand for its exports should pose no threat to export-oriented producers that demand on petrochemicals as raw material.
Turkey remains in fifth place in BMI’s Central and Eastern Europe Petrochemicals Business Environment Ratings this quarter with its score unchanged at 47.1 points. This puts it 0.9 points ahead of Slovakia and 8.3 points behind Hungary. Turkey’s strength lies in the improvements in market risks, particularly following Petkim’s privatisation in 2008, but this has been partly offset by a decline in its country risk score amid economic recession and deteriorating indicators. Foreign investment is being encouraged into downstream sectors in order to bolster the country’s industrialisation.
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