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South Africa’s petrochemicals industry is recovering at an uneven pace, with the expected slowdown in the construction sector set to reduce demand growth for polyvinyl chloride (PVC), while a resurgent car industry will boost sales of polypropylene (PP), according to BMI’s latest report.
GDP growth of around 3.0% in 2010 should provide some more optimism to the petrochemicals sector. Weakness persists in the consumer sector, but we believe that the worst is over. Over the short term, South African petrochemicals production will be more reliant on external demand, particularly from the rest of Africa, and price rises for growth in both volume and margins. This will be somewhat undermined by a surge in capacities in the Middle East and Asia coupled with high oil prices, which are fuelling growth in naphtha feedstock costs.
Construction is likely to remain weak in export markets, thereby dragging down PVC. The domestic market stimulus from the 2010 FIFA World Cup, which led to the construction of stadiums and hotels as well as investment into the country’s transport network, has also abated. As we expect construction activity to die down following the World Cup, we believe that construction industry growth will even out at 3-4% per year until the end of our forecast period. This compares with with average growth of 11.5% year-on-year (y-o-y) between 2005 and 2008. In the automotive sector, a major end-user of South African petrochemicals, an improvement in domestic demand, coupled with growth in exports, should also feed through to production, although carmakers have previously voiced concern regarding the competitiveness of the local industry as raw material prices and shipping costs rise. There has been no shortage of investment, however, despite concerns raised, with Ford and Volkswagen ramping up their South African production and plant capacity over the medium term. BMI expects such longer-term projects to result in total industry output growth of 40% by 2014, which should raise demand for engineering plastics, particularly in the PP segment.
Capacities are not expected to rise significantly or at a rate that will challenge competitors in the Middle East and Asia. By 2010, South African petrochemical capacities will include 650,000tpa ethylene, 330,000tpa propylene, 560,000tpa PE, 60,000tpa PTC, 200,000tpa VCC/PVC, 680,000tpa PP and 145,000tpa methanol. Sasol’s construction of an ethylene purification unit at its Sasol Polymers plant is et to come onstream by mid-2013. The company hopes it will raise production by around 48,000tpa by 2015 and supply PE production facilities, thereby reducing the import dependency of South African plastics converters. There are no further plans for significant expansion or new plants over the next five years, according to BMI research.
In BMI’s Middle East and Africa Petrochemicals Business Environment matrix, South Africa comes seventh with 53.1 points, 2.1 points behind Israel and 3.4 points ahead of Egypt. The South African petrochemical industry is the largest in Africa, although relatively small by international standards. It contributes about 5% of GDP and accounts for 25% of manufacturing sales. The industry is reshaping itself, striving to bring plant capacities closer to world production levels, exploiting niche markets, acquiring foreign assets and promoting foreign partnerships, although it will also face challenges from new capacities in the Middle East and Asia. South Africa has the second largest refining sector in Africa after Egypt, with a total refining/liquid fuels capacity of 695,000b/d. It controls a significant portion of the regional market for refined products.
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Browse All - Business Monitor International Market Research Reports
South Africa’s petrochemicals industry is recovering at an uneven pace, with the expected slowdown in the construction sector set to reduce demand growth for polyvinyl chloride (PVC), while a resurgent car industry will boost sales of polypropylene (PP), according to BMI’s latest report.
GDP growth of around 3.0% in 2010 should provide some more optimism to the petrochemicals sector. Weakness persists in the consumer sector, but we believe that the worst is over. Over the short term, South African petrochemicals production will be more reliant on external demand, particularly from the rest of Africa, and price rises for growth in both volume and margins. This will be somewhat undermined by a surge in capacities in the Middle East and Asia coupled with high oil prices, which are fuelling growth in naphtha feedstock costs.
Construction is likely to remain weak in export markets, thereby dragging down PVC. The domestic market stimulus from the 2010 FIFA World Cup, which led to the construction of stadiums and hotels as well as investment into the country’s transport network, has also abated. As we expect construction activity to die down following the World Cup, we believe that construction industry growth will even out at 3-4% per year until the end of our forecast period. This compares with with average growth of 11.5% year-on-year (y-o-y) between 2005 and 2008. In the automotive sector, a major end-user of South African petrochemicals, an improvement in domestic demand, coupled with growth in exports, should also feed through to production, although carmakers have previously voiced concern regarding the competitiveness of the local industry as raw material prices and shipping costs rise. There has been no shortage of investment, however, despite concerns raised, with Ford and Volkswagen ramping up their South African production and plant capacity over the medium term. BMI expects such longer-term projects to result in total industry output growth of 40% by 2014, which should raise demand for engineering plastics, particularly in the PP segment.
Capacities are not expected to rise significantly or at a rate that will challenge competitors in the Middle East and Asia. By 2010, South African petrochemical capacities will include 650,000tpa ethylene, 330,000tpa propylene, 560,000tpa PE, 60,000tpa PTC, 200,000tpa VCC/PVC, 680,000tpa PP and 145,000tpa methanol. Sasol’s construction of an ethylene purification unit at its Sasol Polymers plant is et to come onstream by mid-2013. The company hopes it will raise production by around 48,000tpa by 2015 and supply PE production facilities, thereby reducing the import dependency of South African plastics converters. There are no further plans for significant expansion or new plants over the next five years, according to BMI research.
In BMI’s Middle East and Africa Petrochemicals Business Environment matrix, South Africa comes seventh with 53.1 points, 2.1 points behind Israel and 3.4 points ahead of Egypt. The South African petrochemical industry is the largest in Africa, although relatively small by international standards. It contributes about 5% of GDP and accounts for 25% of manufacturing sales. The industry is reshaping itself, striving to bring plant capacities closer to world production levels, exploiting niche markets, acquiring foreign assets and promoting foreign partnerships, although it will also face challenges from new capacities in the Middle East and Asia. South Africa has the second largest refining sector in Africa after Egypt, with a total refining/liquid fuels capacity of 695,000b/d. It controls a significant portion of the regional market for refined products.
About Us
ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/
http://reportsandreports.proarticles.co.uk/
http://reportsnreports.wordpress.com/
