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Has investment in Asian Petrochemical sector slowed down?
 

The petrochemical industry in the Asian region has shown significantly better growth over the last decade leading to enhancement of the living standard of its very large population.

In fact, the Middle Eastern region has used it's surplus oil and gas to serve the incessant demand of petrochemical products of the Asian region. The expansion, resulting in more than 4-5 million tonnes of Ethylene derivatives from the Middle Eastern region, will continue for the next 5 years, making the Asian investor a little wary of larger investment in Petrochemical sector.

The Middle Eastern region has tremendous advantage of low cost feedstock (Ethane/Propane gas). The surplus availability of gas in the Middle Eastern region makes them the most economical manufacturers.On the other hand, the Asian Petrochemical producers have to resort to high cost Naphtha feedstock for petrochemical projects because they do not have enough gas. In fact, Naphtha also has to be procured predominantly from the Middle East. Of course, Naphtha could also be obtained from Asian refineries. Whatever be the source, Naphtha as feedstock is more expensive compared to the gas available to the Middle East petrochemical producers. Besides, the lower profitability on petrochemicals over the last couple of years has put additional pressures on the Asian petrochemical producers.

The general economic slowdown of the last 1-2 years has also adversely affected the growth of petrochemical industry. No wonder the investment in the Asian region on petrochemical projects has slowed down. Of course, the economic revival will certainly change the scenario because Asian region definitely has a scope for further growth in the petrochemical sector.

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