The GCC Chemical Industry Facts and Figures

Transcription

1 The GCC Chemical Industry 2013 Facts and Figures

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3 CONTENTS 1. About the chemical industry GCC chemical industry in 2013: key numbers Economic contribution of the GCC chemical industry GCC chemical production capacity by product GCC chemical production capacity by country GCC chemical capacity utilization GCC chemical industry s performance in a global context GCC chemical trade Employment in the chemical industry GCC petrochemicals industry sales revenue Number of chemical patents issued in the GCC in Acknowledgements, References, Special Thanks 108

4 Section 1 What is the chemical industry? 4

5 The chemical industry takes natural raw materials such as oil and natural gas, as well inorganic minerals such as limestone and salt, and converts these into thousands of chemical products. Based on the UNEP, there are about 248,000 chemical products known to date. The chemical industry serves nearly every sector of economy by providing essential inputs in the form of chemical productions or products, intermediate products, specialties and pharmaceuticals. Description 2401 basic chemicals 2402 other chemical products and nitrogen compounds printing ink and mastics botanical products preparations, perfumes and toilet preparations Chemicals Lifecycle The chemicals lifecycle starts with extraction of raw materials (mining, extraction of oil and gas and others) which are used in chemical manufacturing, processing to produce a wide variety of downstream chemical products. These chemical products can, in turn, be used as feedstock for chemicals production further downstream, industrial activities and services, or production of consumer products. At any stage of lifecycle, chemicals are being shipped to various locations within the country of its production or internationally. Raw materials (eg oil, coal, gas, air, water, minerals) Chemicals industry Basic Chemicals Bulk inorganics and organics eg Ammonia, Gases, Acids, Salts, Petrochemicals: Benzene, Ethylene, Propylene, Xylene, Toluene, Butadiene, Methane, Butylene Chemical processing SPECIALITY CHEMICALS Rubber and Plastic goods, Paints, Adhesives, Performance Chemicals CONSUMER CARE PRODUCTS Soap, Detergents, Laundry aids, Bleaches, Haircare, Fragrances, etc LIFE SCIENCE Pharmaceuticals, Agrochemicals, Biotechnology OTHER INDUSTRIES Paper, Textiles,etc Consumers Source: OECD

6 Section 2 GCC Chemical industry in 2013: key numbers 6

7 Represented 3.3% of GCC GDP in 2013 Contributed 35% to manufacturing value added in 2013 Generated $US 89.4 bn in sales revenue in 2013 Directly employs more than people 148,900 people 56% of all employees in the chemicals industry are national citizens $US billion worth of chemical output in 2013 Production capacity of million tons in 2013 Growth of 10% per year over the past decade Accounted for 10% in global output of major products produced in the GCC 7

8 Section 3 Economic contribution of the GCC chemical industry 8

9 The GCC chemical industry contributed 3.3% to regional GDP in 2013 The GCC chemical industry played an integral role GCC: GDP by Main Economic Activities, 2013 Total: $US 1.65 trillion Transport, Storage & Communication 5.4% 9.7% Wholesale & Retail Trade, 8.5% Restaurants & Hotels Finance Insurance, Real Estate & Business Services Construction 5.5% 12.5% Others Electricity and Water 1.4% 9.3% Manufacturing sector 2.4% Petrochemicals & chemicals 3.3% Other manufacturing 3.6% 46.6% Crude Petroleum & Natural Gas Agriculture, Forestry 1.1% & Fishing Note: GDP at current prices Source: GCC National Statistical Authorities, IMF, World Bank, GPCA Analysis,

10 The chemical industry holds the key to success for the manufacturing sector in most of the GCC countries The path to economic prosperity for a nation is tied GCC, manufacturing output, measured by value chemical industry value added registered a growth grew nearly twice as fast as the GCC s GDP. chemical industry to manufacturing GDP is the GCC Chemical Contribution to Manufacturing Added Value by Country, 2013 Saudi Arabia Qatar Oman Kuwait UAE Bahrain 42.7% 42.6% 33.6% 22.9% 21.7% 10.8% Chemicals 57.3% 57.4% 66.4% 77.1% 78.3% 89.2% 100% 100% 100% 100% 100% 100% Other Manufacturing Source: GCC National Statistical Authorities, IMF, World Bank, GPCA Analysis,

11 3.1. Chemical industry contribution to GDP Saudi Arabia Saudi Arabia is the largest economy in the GCC and its chemical industry is a key component of the country s manufacturing sector Saudi Arabia is the largest economy in the GCC region with half of it s activity dedicated to the Gross value added of the chemical and petrochemical industry grew faster than Saudi Arabia: GDP by Main Economic Activities, 2013 Total: $US 749 billion Transport, Storage & Communication 4.8% 9.4% Wholesale & Retail Trade, 8.6% Restaurants & Hotels Finance Insurance, Real Estate & Business Services Construction 4.8% Electricity and Water 1.1% 15.0% Others 10.1% Manufacturing sector 2.4% Petrochemicals & chemicals 4.3% Other manufacturing 3.4% 44.4% Crude Petroleum & Natural Gas Agriculture, Forestry 1.8% & Fishing Note: GDP at current prices Source: Saudi Arabia s National Statistical Bureau, GPCA Analysis,

12 3.1. Chemical industry contribution to GDP Saudi Arabia (continued) Saudi Arabia Manufacturing Added Value by Sub-Sector 100% 90% Contribution to Manufacturing (%) 80% 70% 60% 50% 40% 30% 20% 10% 34.8% 33.6% 40.9% 39.1% 39.8% 37.3% 38.9% 32.2% 31.7% 34.7% 37.4% 42.7% 26.3% 26.8% 29.2% 25.5% 25.4% 23.8% 0% Other manufacturing Petrochemicals and chemicals Source: Saudi Arabia s National Statistical Bureau, GPCA Analysis,

13 3.1. Chemical industry contribution to GDP UAE The chemical industry in the UAE continues to outperform the manufacturing sector The UAE is the second largest economy in the GCC, with a growing manufacturing sector that contributed industry outperformed its manufacturing peers by of manufacturing total. UAE: GDP by Main Economic Activities, 2013 Total: $US 402 billion Transport, Storage & Communication 7.9% 6.6% Wholesale & Retail Trade, 10.2% Restaurants & Hotels Finance Insurance, Real Estate & Business Services Construction 9.0% Electricity and Water 2.4% 15.8% 8.5% Others Manufacturing sector 2.8% Petrochemicals & chemicals 1.8% Other manufacturing 3.9% 38.9% Crude Petroleum & Natural Gas Agriculture, Forestry 0.7% & Fishing Source: UAE National Statistical Authority, GPCA Analysis, 2014

14 3.1. Chemical industry contribution to GDP UAE (continued) UAE Manufacturing Added Value by Sub-Sector 100% 90% Contribution to Manufacturing (%) 80% 70% 60% 50% 40% 30% 20% 10% 49.7% 47.7% 45.8% 55.6% 53.8% 57.4% 20.7% 21.7% 20.2% 15.8% 16.2% 12.0% 28.7% 30.6% 30.0% 30.0% 31.6% 32.5% 0% Other manufacturing Petrochemicals and chemicals Note: GDP at current prices Source: UAE National Statistical Authority, GPCA Analysis,

15 3.1. Chemical industry contribution to GDP Qatar The chemical industry continues to make a substantial contribution to Qatar s manufacturing growth Arabian Gulf region. The country s manufacturing year, while manufacturing GDP in the GCC grew by chemical and petrochemical industry, which Since 2007 the industry has more than doubled, reaching $US 8.4 billion in value added and Qatar: GDP by Main Economic Activities, 2013 Total: $US billion Transport, Storage & Communication 3.5% Wholesale & Retail Trade, 6.2% Restaurants & Hotels Construction 4.9% 12.0% Finance Insurance, Real Estate & Business Services Electricity and Water 0.5% 54.4% Crude Petroleum & Natural Gas 8.6% Others 9.8% Manufacturing Agriculture, Forestry 0.1% & Fishing Note: GDP at current prices Source: Qatar s National Statistical Authority, GPCA Analysis, 2014 sector 1.9% Petrochemicals & chemicals 4.2% Other manufacturing 3.7% 15

16 3.1. Chemical industry contribution to GDP Qatar (continued) Qatar Manufacturing Added Value by Sub-Sector 100% Contribution to Manufacturing (%) 90% 80% 70% 60% 50% 40% 30% 20% 32.9% 49.0% 19.4% 65.5% 44.7% 36.5% 27.7% 37.2% 35.1% 47.4% 34.1% 38.3% 42.6% 10% 0% 18.0% % 18.8% 18.5% 19.2% Other manufacturing Petrochemicals and chemicals Note: GDP at current prices Source: Qatar s National Statistical Authority, GPCA Analysis,

17 3.1. Chemical industry contribution to GDP Kuwait The chemical and petrochemical industry is the second largest manufacturing industry in Kuwait While Kuwait is one of the heavyweight economies in the GCC region, its manufacturing industry the contribution of the petrochemical and chemical result, the contribution of the manufacturing industry to Kuwait s GDP nearly doubled, reaching $US downstream hydrocarbons plays in Kuwait s economy. Kuwait: GDP by Main Economic Activities, 2013 Total: $US billion Construction 1.6% Wholesale & Retail Trade, 3.3% Restaurants & Hotels 1.2% 4.7% Electricity and Water Transport, Storage & Communication 9.8% Finance, Real Estate & Business Services 11.0% Others sector 2.7% 62.8% Crude Petroleum & Natural Gas 5.4% Agriculture, 0.3% Forestry & Fishing Manufacturing Petrochemicals 1.2% Other manufacturing 1.5% Source: National Statistical Authorities, GPCA Analysis,

18 3.1. Chemical industry contribution to GDP Kuwait (continued) Kuwait Manufacturing Added Value by Sub-Sectors 100% Contribution to Manufacturing (%) 90% 80% 70% 60% 50% 40% 30% 20% 33.8% 36.1% 18.4% 12.0% 47.8% 51.9% 26.1% 26.1% 32.9% 30.2% 10.5% 16.6% 22.9% 22.9% 56.6% 53.2% 51.0% 51.0% 10% 0% Other manufacturing Petrochemicals and chemicals Source: National Statistical Authorities, GPCA Analysis,

19 3.1. Chemical industry contribution to GDP Oman The chemical industry in Oman accounts for 1/3 of the manufacturing added value The manufacturing sector in Oman demonstrated second largest sector of the economy following manufacturing added value. Oman: GDP by Main Economic Activities, 2013 Total: $US 80.6 billion Transport, Storage & Communication 4.5% Wholesale & Retail Trade, 7.9% Restaurants & Hotels Construction 5.1% Electricity and Water 1.2% 51.6% Crude Petroleum & Natural Gas 7.6% Finance Insurance, Real Estate & Business Services 9.9% 11% Others Manufacturing Agriculture, Forestry 1.2% & Fishing sector 3.1% Petrochemicals & chemicals 3.7% Other manufacturing 4.2% 19

20 3.1. Chemical industry contribution to GDP Oman (continued) Oman Manufacturing Added Value by Sub-Sector 100% Contribution to Manufacturing (%) 90% 80% 70% 60% 50% 40% 30% 20% 10% 43.0% 11.4% 45.6% 40.1% 41.0% 28.5% 26.7% 31.4% 32.2% 27.1% 35.6% 38.0% 45.4% 34.9% 33.6% 27.6% 29.5% 28.4% 0% Other manufacturing Petrochemicals and chemicals 20

21 3.1. Chemical industry contribution to GDP Bahrain The chemical industry represents 16% of the manufacturing sector in Bahrain The manufacturing sector in Bahrain contributed Bahrain s manufacturing sector. Bahrain: GDP by Main Economic Activities, 2013 Total: $US 32.8 billion Finance Insurance, Real Estate & Business Services 25.2% 13.5% Others Transport, Storage & Communication 6.2% Wholesale & Retail Trade, Restaurants & Hotels 6.2% Construction 5.9% Electricity and Water 1.2% 26.8% Crude Petroleum & Natural Gas 14.7% Manufacturing 0.3% Agriculture, Forestry & Fishing sector 3.4% Petrochemicals & chemicals 1.6% Other manufacturing 9.7% Note: GDP at current prices Source: National Statistical Authorities, GPCA Analysis,

22 3.1. Chemical industry contribution to GDP Bahrain (continued) Bahrain Manufacturing Added Value by Sub-Sector 100% 90% Contribution to Manufacturing (%) 80% 70% 60% 50% 40% 30% 20% 56.4% 17.0% 65.4% 65.9% 64.6% 66.2% 65.8% 14.6% 13.3% 12.9% 11.0% 10.8% 10% 26.7% 20.0% 20.8% 22.5% 22.7% 23.4% 0% Other manufacturing Petrochemicals and chemicals Source: National Statistical Authorities, GPCA Analysis,

23 3.2. Chemical industry contribution to manufacturing output The chemical industry is the second largest industry within the manufacturing sector in the GCC and has surpassed the sector s growth outperformed the manufacturing sector, growing by GCC Manufacturing Output by Industry, $US Billion 15% * 2012* 2013* Chemicals Non-metallic minerals Food products & beverages Basic metals Others

24 3.2. Chemical industry contribution to manufacturing output (continued) GCC Manufacturing and Chemicals Industry Index (2008 = 100) Chemicals Manufacturing 24

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26 Section 4 GCC chemical production capacity by product 26

27 4.1. Capacity breakdown per product segment Chemical output in the GCC tripled over the past decade, driven by capacity addition in basic chemicals, polymers and fertilizers industry segments during the past decade driven by capacity additions within basic petrochemicals, polymers GCC Chemicals Production Capacity Million Tons 12.2% 14% 3.7% 11.4% 9.7% 5.1% 4% 31.5% 45.2 CAGR ( ) Basic Polymers Downstream Chemicals Intermediates Mainstream Fertilizers Fertilizer Raw Material Inorganic chemicals Specialties Petrochemicals Basic Inorganics

28 GCC chemical capacity reached million tons in 2013, of which 2/3 are petrochemicals total chemical industry output in the GCC. Basic petrochemicals and polymers are the largest segments with a production capacity reaching 45.2 million tons and 24.1 million tons respectively. Polymers are amongst the most important products currently produced in the GCC. The demand for thermoplastics and differentiated performance polymers continues to grow and is fueled by growth in the electronics, construction and automotive industries. GCC Chemicals Production Capacity by Product Segment % Petrochemicals Basic Inorganics Basic Mainstream Fertilizers Polymers Fertilizer Raw Material Downstream Chemicals Inorganic chemicals Intermediates Specialties GCC Chemicals Productions Capacity by Product Segment Total: million tons Petrochemicals: 69.3% Intermediates Downstream Chemicals 4.6% 15.4% 13.8% Mainstream Fertilizers 15.1% Basic Inorganics: 30.4% Fertilizer Raw Material Polymers 17.1% 1.5% Inorganic chemicals 32.2% Basic 0.3% Specialties 28

29 4.2. Capacity breakdown by value-chain GCC chemical industry growth during the past decade was largely driven by capacity additions within C2 (Ethylene) and C1 (Methane) value chain products GCC Chemicals Production Capacity by Value Chain, 2013 Total: Million Tons Inorganic chemicals 10.8% 0.6% C4-Butadiene GCC Chemicals Production Capacity by Value Chain Million Tons Aromatics 10.9% 36.2% C2-Ethylene 50.9 C3-Propylene 11.3% % C1-Methane C2-Ethylene C1-Methane C3-Propylene Aromatics Inorganic chemicals C4-Butadiene

30 4.2. Capacity breakdown by value chain Ethylene and methane based products continue to represent the majority of GCC chemical output C1 and C2 are the most developed chains within the GCC chemical industry, jointly accounting for volume of the two chain products presently stands for 50.9 million tons and C1 products accounting for 42.4 million tons. While this composition didn t change much over the past years, the propylene and aromatics value chains are gaining pace. Over the past decade the two chains recorded the highest GCC Petrochemicals Production Capacity by Value Chain % C1-Methane C2-Ethylene C3-Propylene C4-Butadiene Aromatics Inorganic chemicals

31 4.3. Basic petrochemicals GCC basic petrochemical output tripled over the past decade as production of ethylene and propylene surged Ethylene has traditionally been the industry s main building block in the GCC, representing almost half growth rate among other basic chemicals due the fact that majority of GCC methanol is being exported. Production capacity of propylene reached 7.1 million petrochemical output total. Propylene output grew by highest growth among other basic petrochemicals. represented only a minor share, there was a substantial expansion of aromatics production capacity over the highest among other commodity chemicals. GCC Basic Petrochemicals Production Capacity Million Tons Ethylene Methanol Propylene Benzene Mixed Xylenes Toluene Butadiene

32 4.3. Basic petrochemicals Basic petrochemicals production capacity grew by 2.5% year-on-year in 2013 reaching 45.2 million tons GCC Basic Petrochemicals Production Capacity by Product % Ethylene Methanol Propylene Benzene Mixed Xylenes Toluene

33 4.4. Fertilizer industry Nitrogen based fertilizers account for the lion s share of the GCC fertilizer production industry with phosphate based fertilizers at rapid, yet steady rise produced in the GCC, production of diammonium phosphate (DAP) is rapidly increasing. With Saudi Arabia as of 2011, the total regional GCC Mainstream Fertilizers Production Capacity Million Tons 6.9 Urea Diammonium phosphate (DAP) NPK Urea Formaldehyde Sulphur Bentonite Fertilizer GCC Mainstream Fertilizers Production Capacity 9.6% Urea Diammonium phosphate (DAP) NPK Urea Formaldehyde Sulphur Bentonite Fertilizer

34 Ammonia is the largest nitrogen fertilizer raw material produced by the GCC fertilizer industry with a production capacity of 11.7 million tons GCC ammonia production capacity reached 11.7 industry with its usage as a plant nutrient and for processing of phosphate rock into phosphate Sulphuric acid is essential for the production of and the ammonium phosphates. GCC producers are past years. GCC Fertilizer Raw Material Production Capacity % Ammonia Sulphur Sulphuric Acid

35 4.5. Polymer industry GCC polymer output quadrupled over the past decade driven by a surge in production of polypropylene and polyethylene past decade were from polypropylene (PP) and polyethylene (PE). The former recorded the highest respectively. GCC Polymers Production Capacity Million Tons PP HDPE LLDPE LDPE PET PVC PS PC Polyester Fiber Polyamide 6.6 EPS

36 Thermoplastics represent almost 98% of the GCC polymers industry, however new products are being introduced as well GCC polymer capacity reached 24.1 million by thermoplastics: PE, PP, PVC, PS and PET. lion s share within the polymer industry segment, tons per year, polypropylene (PP) is the second largest polymer in the GCC by volume and accounts have been launched over the past years, including polycarbonate, super absorbent polymer and polyamide 6.6 which represents the ongoing by the GCC producers. GCC Polymers Production Capacity by Product % PE GCC Polymers Production Capacity by Product, 2013 Total: 24.1 million tons Polyamide % 29.7% HDPE EPS 0.1% Polyester Fiber 0.6% PC 1.1% PS 1.6% 17.9% LLDPE PVC 1.9% PET 5.7% 7.2% LDPE 33.8% PP

37 4.6. Top 10 chemical products produced in the GCC Ten products account for over 2/3 of the region s chemical capacity The GCC industry s top ten products by volume include three sets of product segments which make up the following: Base chemicals, which include ethylene, methanol and propylene. These region s total output. Share split is: ethylene Urea is the second largest product in the GCC Polymer products, which include: polyethylene Top 10 Products in GCC Chemicals Industry 2013 Others 33.0% MTBE 3.0% LLDPE 3.1% MEG 3.8% Propylene 5.0% Million Tons HDPE 5.1% PP 5.8% Ethylene 15.5% Methanol 6.6% Urea 10.8% Ammonia 8.3%

38 4.7. Global share of GCC top 10 products The top ten GCC chemical products accounted for a global share ranging from 5.5 to 22.4% The GCC industry s global position is large and growing GCC share in global production capacity in 2013 Top 10 chemicals products manufactured in the GCC MTBE 22.4% MEG 18.5% HDPE 16.4% Ethylene 14.2% LLDPE 13.7% PP 12.3% Methanol 9.4% Urea 7.6% Propylene 6.7% Ammonia 5.5% Source: ICIS, GPCA, %

39 GCC ethylene capacity s global share accounts for 14.2% of the world s total capacity Ethylene is one of the largest and most versatile Asia is at present the largest ethylene producer in almost triple the growth rate of the global industry, the GCC s share in world ethylene capacity has Global Ethylene Production Capacity by Region ( ), MTPA % 9.8% % 14.2% 17.2% % % % Asia (Exl China) China North America Europe GCC Latin America Africa Others Source: ICIS, GPCA Analysis, 2014

40 The GCC s urea output is increasing and achieved a global share of 7.6% in 2013 in The majority of these capacity additions took place in Asia and the GCC. Between 2009 production capacity. Driven by a growth rate that was three times the global industry s growth rate, the GCC industry ranks as the third largest global production hub for urea. Global Urea Production Capacity by Region ( ), MTPA % 9.5% % 4% 5.7% 7.6% 14% % Asia Europe GCC North America Africa Latin America Rest of the world 40

41 Growth in the GCC s ammonia production capacity outstripped global industry growth World ammonia production capacity reached the fastest growing among other parts of the world. Global Ammonia Production Capacity by Region ( ), MTPA 2.7% % % 5.5% 5.7% 8.2% 22.1% % Asia Europe North America Latin America GCC Africa Others 41

42 Conversely, the GCC global methanol share had declined in 2013 There are around 90 methanol plants worldwide, million tons and producing methanol from various feedstock natural gas, coal, biomass and waste. China is the largest methanol producer in Asia, with fold larger than the GCC methanol industry. the production capacity of methanol in the GCC Global Methanol Production Capacity By Region ( ), MTPA % 3% % 2.4% 3.2% 4% 9.4% 12.8% 6.9% % China Asia (Excl China) Latin America GCC Europe Africa North America Rest of the world 42

43 The GCC s global share in polypropylene output has increased during the past years, accounting for 12.3% of world production output in 2013 World production capacity of polypropylene (PP) in 2012 is estimated to be 61.9 million tons, with close The GCC region is slightly behind both Europe and additions by the GCC producers during the past years, the region s global share has increased from Global PP Production Capacity By Region ( ), MTPA % 9% % 4.7% 12.3% 13.4% % % % Asia (Excl China) China Europe North America GCC Latin America Africa Rest of the world Source: ICIS, GPCA Analysis, 2014

44 The GCC s global HDPE share is large and growing steadily tons in This capacity increment has been of that of the global industry. China is the largest highest growth rate after Asia. Global HDPE Production Capacity by Region ( ), MTPA % 15% % 1.7% 4.3% 16.4% % % 13.2% % Asia (Excl China) China North America Europe GCC Latin America Africa Rest of the world Source: ICIS, GPCA Analysis,

45 The GCC propylene output accounts for a modest share in the global industry s output by capacity additions in Asia and the GCC. lowest among other regions. Global Propylene Production Capacity by Region ( ), MTPA % 6% % 3.6% 6.7% 18.3% % 19.9% % Asia (Excl China) North America China Europe GCC Latin America Africa Rest of the world Source: ICIS, GPCA Analysis,

46 The GCC is the second largest MEG producer in the world and PET resins producers, the monoethylene glycol China, Taiwan, USA and Canada. Global MEG production capacity by region ( ), MTPA % % 1.4% 4.8% 16.7% % % 17.6% % Asia (Excl China) China GCC North America Europe Latin America Rest of the world Source: ICIS, GPCA Analysis,

47 The GCC global market share of LLDP is around 14% at present with the highest output growth rate registered in The GCC continues to be the third region worldwide Global LLDPE production capacity by region ( ), MTPA % 1% % 1.5% 4.6% 11.1% 13.7% 21.3% % % Asia (Excl China) China North America GCC Europe Latin America Africa Rest of the world Source: ICIS, GPCA,

48 The GCC emerged as the world second largest producer of MTBE large quantities and is used as a fuel additive in ether) output was estimated at 19 million tons in production capacity since 2009 and it remains at Global MTBE production capacity by region ( ), MTPA % % 13% 17% 5% % % % China Asia (Excl China) GCC Europe North America Latin America Rest of the world 48

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50 Section 5 GCC chemical production capacity by country 50

51 5.1. GCC production capacity by country The chemical industry in Saudi Arabia made an impressive growth tripling output during the past decade Saudi Arabia is emerging as a global production hub for chemicals and plastics. With 91.5 million tons, Saudi Arabia s chemical industry represents the lion s share of the regional chemical industry, GCC Chemicals Production Capacity by Country (Million Tons) Saudi Arabia Qatar UAE Oman Kuwait Bahrain

52 While Saudi Arabia continues to be the leading player in the region, other GCC countries rapidly expand their production as well Strong and consistent expansion of regional chemical production has led to the structural the past decade the chemical output has doubled Each GCC state experienced its own unique growth pattern. Saudi Arabia s chemical expansion largely industry and the UAE on plastics. GCC Chemicals Production Capacity by Country % Saudi Arabia Qatar UAE Oman Kuwait Bahrain 52

53 5.2. Chemical production capacity in Saudi Arabia Chemical output in Saudi Arabia has tripled over the past decade reaching 91.5 million tons in 2013 Chemical industry output in Saudi Arabia past decade. of total chemical output in Saudi Arabia. Basic petrochemicals and intermediates are the largest product segments with production capacity reaching Chemicals Production Capacity in Saudi Arabia (Million Tons) 9.7%

54 In terms of the industry s product portfolio, basic petrochemicals represent the largest product segment accounting for 34% of the total output in Polymers and fertilizers account jointly for 37.4% of the industry s total output. Saudi Arabia Chemicals Capacity by Product Segment, 2013 Total: 91.5 million tons Petrochemicals: 79.9% Polymers 19.6% Downstream Chemicals 5.4% Basic Inorganics: 19.8% 10.4% Fertilizer Raw Material Intermediates 21.0% 7.8% Mainstream Fertilizers 1.5% Inorganic chemicals 33.9% Basic 0.3% Specialties 54

55 5.3. Chemical production capacity in Qatar Qatar s industry expansion over the past decade is driven primarily by massive capacity addition in the fertilizer industry than half of the country s chemical industry production capacity, producing 5.8 million tons of mainstream outstripped that of production rises across other product segments. Over the past decade it grew by to add value downstream and reduce the country s dependence on oil and gas revenues. Chemicals Production Capacity in Qatar (Million Tons) Qatar Chemicals Capacity by Product Segment, 2013 Total: 19.3 million tons Petrochemicals: 40.3% Basic Inorganics: 59.2% 29.9% Mainstream Fertilizers 9.5% Intermediates 3.3% 25.6% Fertilizer Raw Material 7.8 Downstream Chemicals 5.4% Polymers 9.7% 3.7% Inorganic chemicals 21.9% Basic 0.5% Specialties

56 5.4. Chemical production capacity in the UAE Plastics production is the key focus area for the UAE chemical industry Output of the UAE chemical industry has doubled over the past decade reaching 10.5 million tons remarkable expansion of the polymer industry 2.4 million tons representing almost a quarter of the total output of the UAE s chemical industry. UAE Chemicals Capacity by Product Segment, 2013 Total: 10.5 million tons Petrochemicals: 55.1% Intermediates 0.3% Downstream Chemicals 4.7% Polymers 23.0% 26.7% Fertilizer Raw Material 18.2% Basic Inorganics: 44.9% Mainstream Fertilizers UAE Chemicals Production Capacity (Million Tons) 27.1% Basic 8.8%

57 5.5. Chemical production capacity in Oman Industry growth in Oman was driven by capacity addition in the fertilizer and polymer products segments Output of the Oman chemical industry has tripled over the past decade, reaching 9.1 million tons in Oman Chemicals Capacity by Product Segment, 2013 Total: 9.1 million tons Petrochemicals: 47.1% Polymers 10.3% 21.3% Fertilizer Raw Material 31.6% Basic Inorganics: 52.9% Mainstream Fertilizers Oman Chemicals Production Capacity (Million Tons) 36.8% Basic 16%

58 5.6. Chemical production capacity in Kuwait Chemical output in Kuwait almost doubled over the past decade reaching 8.6 million tons in 2013 country s petrochemical industry was centered on The industry has almost doubled its output over Among the industry segments, expansion of basic petrochemicals and intermediates in Kuwait was largest industry segments and account for almost capacity of polymers grew at similar pace as as industry s output. Chemicals Production Capacity in Kuwait (Million Tons) Kuwait Chemicals Capacity by Product Segment, 2013 Total: 8.6 million tons 5.9% Petrochemicals: 70.6% Polymers 11.3% 16.5% Fertilizer Raw Material Basic Inorganics: 29.4% Intermediates 20.3% 0.9% Inorganic chemicals 12.1% Mainstream Fertilizers 38.9% Basic

59 5.7. Chemical production capacity in Bahrain Chemical output in Bahrain remains 1.5 million tons per year Bahrain s petrochemical sector is dominated by Production capacity in Bahrain is 1.5 million tons over the past decade. Therefore the country remains only a marginal producer in the region. Bahrain Chemicals Capacity by Product Segment, 2013 Total: 1.5 million tons Petrochemicals: 26.9% 35.1% Fertilizer Raw Material 38% Basic Inorganics: 73.1% Mainstream Fertilizers Chemicals Production Capacity in Bahrain (Million Tons) 26.9% Basic 0.3%

60 Section 6 GCC chemical capacity utilization 60

61 6.1. Capacity utilization by country The capacity utilization of the GCC chemical industry witnessed a rise from 91% in 2012 to 94% in 2013 GCC Petrochemicals Capacity Utilization by Country, % Bahrain 100% Bahrain 116% Qatar 83% Qatar 103% Kuwait 97% Kuwait 99% Oman 94% Oman 94% GCC 91% GCC 94% Saudi Arabia 92% Saudi Arabia 92% UAE 91% UAE 88% 61

62 6.2. Capacity utilization by product segment The capacity utilization in the GCC industry improved throughout the main industry s products segments in 2013 number of product segments. The highest among by basic chemicals and intermediates. The production of basic chemicals and intermediates is least exposed to external factors, the reason being that the majority of production is consumed captivity within the region. Producers of basic chemicals in The majority of downstream chemicals and polymers produced in the region are exported overseas. Operating rates of plants producing polymer operating rates of downstream chemicals have GCC Chemicals Industry Capacity Utilization by Product Segment, % Intermediates 97% Intermediates 100% Basic 94% Basic 98% Fertilizers 84% Fertilizers 94% Specialties 95% Specialties 94% All Products 91% All Products 94% Downstream Chemicals 99% Downstream Chemicals 90% Inorganic Chemicals 90% Inorganic Chemicals 89% Polymers 88% Polymers 81% 62

63 6.3. GCC capacity utilization in a global context In 2013, the GCC s chemical industry s capacity utilization improved by 3%, whilst its global counterpart declined by 2% Over the past year, the global industry s capacity driven by requirements to clear existing stocks and not to build up new as well as temporary shut downs of basic chemicals production units. contributing factor to this improvement was higher operating rates in production of basic chemicals, GCC and Worldwide Chemicals Capacity Utilization, % 95.0% 90.0% 85.0% 93% % % % % % 75.0% World Capacity Utilization GCC Capacity Utilization

64 Section 7 GCC chemical industry s performance in a global context 64

65 7.1. Chemical industry growth versus total manufacturing growth Over the past years, both the GCC chemical industry and the manufacturing sector have been on a recovery trend During 2010 and 2011, the growth rate of chemical industry s output (measured in value terms) outperformed that of the manufacturing sector as chemical sector s output growth was more than doubling that of the manufacturing sector in 2011 for manufacturing). chemicals (measured in volume terms) were far lower compared to the manufacturing sector in the same region. The lower growth rate of the chemical of chemical production expansion in During 2010 and 2011, the GCC chemical industry s growth in economic meltdown level of 2008 (2.2 times higher). The recovery in the GCC chemical industry proved powerful and depicted an encouraging trend. The recovery in the manufacturing sector was 1.6 times higher only.compared to the level before the crisis of Chemicals YOY growth performance against total manufacturing 19% 19% -8% -12% 33% 22% Chemicals 47% 21% Manufacturing 4% 10% 6% 65 15%

66 7.2. Chemical industry contribution to total manufacturing: GCC versus the global industry The GCC chemical industry outpaced the global industry in term of the production capacity expansion year over the past decade, triple that of the global industry, which recorded an average growth rate of Plastic resins are still the leading segment, with chemicals were the only industry segment which registered a negative growth in 2008 compared to Looking at the different industry segments, the of the global industry. Comparing agrochemicals/ growth rate was triple that of the global industry: global counterpart. World and GCC Production Growth by Product Segment, CAGR ( ) Global chemical production during the period of demonstrated the strongest recovery with production contrast, the organic chemicals have followed a less 2.4 Specialty Chemicals 3.6 Plastic Resins Organic Chemicals World Agricultural Chemicals / Mainstream Fertilizers GCC Source: GPCA, ACC, Inorganic Chemicals Chemicals (excl Pharmaceuticals) The GCC industry showedcased a much more positive picture with the chemical production level 66

67 Global Production Index by Product Segment (Index 2007=100) Chemicals (excluding Pharmaceuticals) Agricultural Chemicals Inorganic Chemicals Organic Chemicals Plastic Resins Specialty Chemicals Source: American Chemistry Council, 2014 GCC Production Index by Product Segment (Index 2007=100) Chemicals (excluding Pharmaceuticals) Inorganic chemicals Plastic Resins Mainstream Fertilizers Organic Chemicals Specialty Chemicals Source: Gulf Petrochemicals and Chemicals Association (GPCA),

68 7.3. Chemical industry growth trends by product segment: GCC versus the global industry Rapid growth in Asia and the GCC has had profound impact on the global chemicals industry Over the past decade, global chemical output in the GCC and Asia. The GCC chemical industry ranked top of the all other regions, with a growth Global Chemicals Production Growth by Region 2013 Year-On-Year Growth 5.3% 4.1% 3.9% 1.3% Total Global Output (Excl Pharma), 2.7% 0.5% over the previous year, led by Asia and GCC. Asia GCC Africa and Middle East North America Western Europe -0.1% Latin America -0.7% Central and Eastern Europe Source: GPCA and ACC, 2014 Global Chemicals Production Growth by Region CAGR ( ) 10.4% 6.5% 5.3% 2.6% Total Global Output (Excl Pharma), 3.1% 2.1% 1.3% 0.0% GCC Asia Africa and Middle East Latin America Central and Eastern Europe Western Europe North America Source: GPCA and ACC Analysis,

69 69

70 7.4. The chemical industry growth trends by region: GCC versus the global industry The chemical industry contributes to nearly 2% of GDP in top 15 producing nations (2013) The chemical industry is the key sector of the economy contributing to the development of people, business and social environment over time. and creating wealth. Data show that the share of GDP represented by the chemical industry in top 15 nations of the world (based on chemicals added value) ranged from chemical producers, China and USA, registered to the GDP respectively. An average contribution of chemical industry to the GDP for the listed 15 The chemical industry contributes up to 12.6% of manufacturing added value in top 10 producing nations (2013) An average contribution of the chemical industry to the manufacturing sector for the listed 10 chemical industry has evolved over time, through advancement in labor productivity and therefore its than other more labor intensive industries. The contribution of chemicals activity to the manufacturing sector in top 10 nations of the world (based on chemicals added value) ranged from The GCC chemical contribution to GDP is far above the average level of the top 15 nations 70

71 Top 15: Contribution of chemicals to GDP (% added value, 2013) Chile 4.8% Iran 3.7% China 3.4% GCC 3.3% Korea 2.6% India 1.5% USA 1.4% Brazil 1.4% Japan 1.4% Germany 1.2% Russia 1.0% Canada 0.9% Mexico 0.8% France 0.7% Italy 0.6% 1.9% Top 10: Contribution of chemicals to manufacturing (% added value, 2013) GCC 35.2% India 13.0% Brazil 12.2% USA* 11.7% China* 10.7% Canada 9.7% Korea 9.3% Russia France Japan* 8.2% 8.1% 7.5% 12.6% International, and GPCA analysis

72 Section 8 GCC chemical trade 72

73 8.1. GCC chemical export by product segment The GCC posted a record 66.1 million tons in chemical exports, yet petrochemicals continue to dominate GCC chemical industry was spurred by the export markets and increasing demand. The volume of a ten year period, GCC chemical exports grew them, polymers have experienced a dramatic commodity thermoplastics. export from the GCC. Over the past decade, GCC Specialty chemicals and consumer chemicals, although high value products, represent a minor share in GCC chemicals exports accounting for GCC Chemicals Export Million Tons % GCC Chemicals Exports by Product Segment 2013 (Total: 66.1 million tons) Polymers 28.1% Petrochemicals 63.4% 27.8% Fertilizers 33.9% Basic Inorganics Basic,Intermediates and Downstream Chemicals 35.3% Consumer Chemicals 0.8% 0.05% Industrial Gases 6.1% Inorganic Chemicals 1.9% Specialty Chemicals

74 GCC foreign trade in chemicals mounted to a record high of $US 54.6 billion in 2013 from trade opportunities. The industry posted record The sectorial analysis of GCC exports performance provides the following results: value terms. Polymer exports saw the highest growth rate among other product segments with exports of the past decade. Within the basic inorganics segment, the bulk of the one of the highest among other products. GCC countries have exported $US 2.1 billion worth of of global exports. While at present they represent only focus of the GCC countries on production and export of specialty chemicals. GCC Chemicals Export $US billion % GCC Chemicals Exports by Product Segment 2013 (Total: US$ 54.6 billion) 45.8% Polymers Petrochemicals 81.2% 13.6% Basic Inorganics 11.4% Fertilizers Basic,Intermediates and Downstream Chemicals 35.4% Consumer Chemicals 1.4% 0.3% Industrial Gases 1.9% Inorganic Chemicals 3.8% Specialty Chemicals 74

75 The GCC imported 18.3 million tons of chemicals in 2013, the majority of which are intermediate products GCC Chemicals Import Million Tons tons of chemicals, which represent an average Notably, most of the GCC chemical imports are intermediate products used by various industries: inorganic chemicals, petrochemicals and industrial gases. Products of inorganic chemistry historically represented the lion share of up to half of the overall import volume % Underdeveloped specialty and consumer chemicals market in the region continue to provide import opportunities for overseas producers. The majority of the 1.8 million tons of imported specialty chemicals Source: GPCA and ACC, 2014 GCC Chemicals Import by Product Segment 2013 (Total: US$ 18.3 billion) Industrial Gases 0.7% Fertilizers 1.9% 50% Basic Inorganics Inorganic Chemicals 47.4% Polymers 17.3% Petrochemicals 35.8% 10.0% Inorganic Chemicals Basic,Intermediates and Downstream Chemicals 18.5% 4.2% Consumer Chemicals 75

76 8.2. GCC chemical import by product segment Nearly half of the GCC chemical imports are represented by high value specialty chemicals and polymers GCC Chemicals Import Million Tons worth of specialty chemicals, which represents imported specialty chemicals are sourced from Europe, followed by Asia and North America % Polymer imports to the GCC stood at US$ 6.4 GCC chemical imports. About one third of polymer third imported from Asia followed by Western Europe GCC Chemicals Import by Product Segment 2013 (Total: US$ 23.1 billion) Polymers 27.8% 0.9% Fertilizers Petrochemicals 49.9% 0.5% Industrial Gases 17.7% Basic Inorganics Other Petrochemicals 22.2% 16.3% Inorganic Chemicals Consumer Chemicals 7.4% 25.0% Specialty Chemicals 76

77 8.3. GCC chemical export destination by country Saudi Arabia continues to be the largest chemical exporter in the GCC, although during the last ten years Saudi Arabia is the largest chemical exporter in the Saudi Arabia continues to be the leading regional to the export growth from other GCC countries,. chemicals export has doubled over the past decade. Oman showed a similar performance and contributed GCC Chemicals Export by Origin Million Tons % Saudi Arabia Qatar Oman Kuwait UAE Bahrain GCC Chemicals Export by Origin 2013 (Total: 66.1 million tons) Kuwait 6.2% Oman 10.5% UAE 3.9% 1.8% Bahrain 54.1% Saudi Arabia Qatar 23.5% 77

78 8.4. GCC chemicals import by country Chemical imports by the UAE and Saudi Arabia more than doubled in the past ten years, and account for nearly 75% of total GCC chemical imports Over the past decade, GCC chemical imports have imports were inorganic chemicals from Asia. Saudi Arabia is the second largest chemicals import volume. Like the UAE, the majority of imports is comprised of inorganic chemicals imported from Asian countries. contributed largely to the positive development of chemical imports in these two countries over the past 10 years. The UAE and Saudi Arabia GCC Chemicals Import by Country Million Tons % Saudi Arabia Qatar Oman Kuwait UAE Bahrain GCC Chemicals Import by Country 2013 (Total: 18.3 million tons) Qatar 9.1% Bahrain 4.9% 3.3% Kuwait Oman 10.0% Saudi Arabia 27.9% 45.0% UAE 78

79 8.5. GCC chemical export by destination In 2013, GCC chemicals producers exported to more than 180 countries worldwide Over the past decade, global chemical output grew GCC and Asia. The GCC chemical industry ranked per year with Asia being the next in line with a North America 3 countries Latin America 36 countries Western Europe 26 countries Middle dle East 13 countries Africa 54 countries GCCC over the previous year, led by Asia and GCC. Central & Eastern Europe 22 countries Asia 32 countries Top 10 Export Destinations USA India Thailand Australia South Africa South Korea China Brazil Pakistan Bangladesh 79

80 GCC Chemicals Exports by Major Regions and Countries 2013 USA 97% North America 3.2 million tons Others 17% Peru 49% Others 39% Netherlands 11% Latin America 2.22 million io tons Panama 8% Africa 5.4 million tons Others 49% Brazil 70% Western Europe 7.9 million tons Moroco 12% Middle dle East 1.5 million tons Lebanon 12% Belgium 26% Turkey 24% Central and Eastern Europe 0.5 million tons Others 28% Ukrain 8% Estonia 9% Others 15% Yemen 15% South Africa 24% Egypt 15% Jordan 58% Others 41% Singapore 9% Poland 55% Asia 39.5 million tons China 28% India 22% 80

81 The largest export market for GCC chemical producers is Asia, accounting for nearly 60% of total exports accounting for the largest share. Development of the manufacturing sector in China has boosted its demand for raw materials, including chemicals. As a result GCC chemicals exports to China grew by Western Europe is the second largest export market volume, or 7.9 million tons. The EU economic block is the major important trading partner for the GCC in Western Europe. the rise. Over the past decade exports within the GCC Chemicals Export by Destination 2013 (Total: 66.1 million tons) GCC Chemicals Export by Economic Blocks 2013 (Total: 66.1 million tons) Middle East(Excl GCC) 2.2% Latin America 3.3% North America 4.8% GCC 6.0% Africa 8.1% Western Europe 12.0% Central & Eastern Europe 0.8% Others 3.0% Asia 59.7% ASEAN 8.0% NAFTA 4.8% GCC 6.0% EU 9.3% SAPTA 16.4% 0.5% 2.4% ANDEAN 0.3% MERCOSUR CEFTA Others 7.3% APEC 45.0% 81

82 8.6. GCC chemicals import by origin for GCC chemical producers Asia has traditionally been the largest export market for GCC chemical producers, representing more the value of the GCC chemical export to Asia is Western Europe is the second largest export destination for the GCC chemical industry. GCC chemical export to Latin America and Central and GCC members has multiplied by 8.6 times over the GCC Chemicals Export by Destination 2013 ($US 54.6 billion) GCC Chemicals Export by Economic Blocks 2013 ($US 54.6 billion) North America 2.7% Middle East(Excl GCC) 3.7% GCC 8.4% Latin America 2.0% Central & Eastern Europe 1.4% Others 1.2% GCC 8.4% NAFTA 2.7% ASEAN 7.4% MERCOSUR CEFTA 0.8% 1.2% ANDEAN 0.4% Others 10.8% Africa 9.0% EU 11.9% Western Europe 15.2% Asia 56.3% SAPTA 13.3% APEC 43.0% 82

83 8.7. GCC chemicals trade balance by product segment With positive growth over the past decade, the GCC industry achieved a record chemical trade surplus in 2013 Over the past decade, the GCC chemical industry demonstrated a consistent growth in trade surplus, Key contributors to the growth of the GCC chemical trade balance are the fertilizer and polymer industry segments. GCC Chemicals Trade Balance Million Tons GCC Chemicals Trade Balance by Product Segment Million Tons Industrial Gases Inorganic Chemicals Specialty Consumer Chemicals Chemicals Basic Intermediates & Downstream Chemicals Polymers Fertilizers Trade Balance Import Export