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Egypt Petrochemicals Report Q3 2011
Business Monitor International, June 2011, Pages: 55
Business Monitor International's Egypt Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt's petrochemicals industry.
Civil unrest and the overthrow of the government of Hosni Mubarak have appeared to have little impact on the petrochemicals industry with investment in new facilities on course and operations at strikeaffected plants back to capacity, according to BMI’s latest Egypt Petrochemicals Report. Provided there is an orderly transition, we see no reason for delays or cancellations of forthcoming projects. If anything, investor interest has risen despite the political turmoil.
Egypt is still able to uniquely combine a strong long-term economic and consumer spending outlook with an unusually large market by regional standards and an ability to attract foreign investment. Earlier in 2011, Methanex started up EMethanex’s 1.26mn tpa methanol plant at Damietta, at a cost of US$1bn. Opening was temporarily disrupted by strike action during the unrest. The plant has transformed Egypt into a methanol exporter.
Ongoing projects include Carbon Holdings’ methanol and ammonia complex with 1,060tpd ammonia nitrate capacity that will be supplied with ammonia from other facilities until an ammonia unit comes online. Construction is due commence in 2011. Carbon Holdings is also making progress at its new olefins product with a three-line Unipol process PE plant with combined capacity of 1.35mn tpa, due onstream in 2015. Other projects include EPPC’s new 350,000tpa PP facility at Port Said, which BMI believes should be fully functional in 2011. Meanwhile, a new VCM/PVC plant complex originally due to start up in February 2010 was delayed by TCI Sanmar, possibly to 2011. The VCM plant will have a capacity of 400,000tpa and the PVC plant will have a capacity of 200,000tpa that is scheduled to be doubled by 2012.
These are joined by recently announced projects, such as Sidpec’s proposal in April for a 460,000tpa ethylene plant, which will need a partner if it goes forward, and plans put forward by a Japanese consortium to develop with Egypt’s Carbon Holdings the world’s largest methanol plant at Ain Sohkna. The proposed methanol facility would have a combined capacity of 6,000 tonnes per day (tpd) with hydrogen-rich gas by-products would be used in a separate 2,000tpd ammonia plant to be based at the same site. Work on the methanol/ammonia complex is scheduled to begin in 2012 with completion targeted for the middle of 2015. The government is also interested in opening a second 1.26mn tpa methanol plant at the Damietta site by 2015 with capacity of 200,000tpa dimethyl ether (DME).
In 2011, the Egyptian petrochemicals market will be held back by relatively low domestic demand, compounded by a downturn in demand in Europe and expansion in output in the Middle East, which will also undermine Egyptian exports. The unexpected rise in political unrest in early 2011 will compound the problem, even though it will not affect investment. The unrest saw strike action affecting Egypt’s industrial sector as well as disruption to port activities, notably in Alexandria and Suez. While the devaluation of the Egyptian pound meant that imports fell drastically, the resumption of port operations meant that exports were quickly returning to normal. Sustained political stability will be crucial to maintaining a market for domestic output.
In the Middle East and Africa Petrochemicals Business Environment Ratings, Egypt is joint eighth with Turkey, with 47.1 points. It lies 6.2 points behind South Africa and 7.6 points ahead of Algeria in our regional ranking. The score has upside risks as a result of a more positive outlook from 2011 and continuing, albeit stuttering, progress on expansion of petrochemicals capacity. However, the country is unlikely to overtake South Africa and rise up the rankings any time soon.
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