The Middle East chemical industry is projected to grow at a faster pace than the global growth until 2020, with petrochemicals and fertilisers registering Compound Annual Growth Rate (CAGR) of 8.3 per cent and 6.7 per cent, respectively, a report said.

These two segments are estimated to account for over 75 per cent of the market in 2020, added the release from Frost & Sullivan, a growth partnership company.

The chemical industry in the Middle East was valued at $160 billion in 2013, the release said, adding that petrochemicals and polymers, followed by fertilisers represented the largest segments, accounting for over 60 per cent of the market.

Other major segments included paints and coatings, water treatment chemicals, construction chemicals, etc.

Aparajith Balan, programme manager- Chemicals and Materials, Mena, Frost & Sullivan said: “Middle East, particularly the GCC is diversifying into the production of value added chemicals, extending beyond its traditional forte of bulk chemicals and petrochemicals. Large projects are underway for the production of specialty chemicals, including performance polymers, specialty chemicals and intermediates.”

Driven by the various mega projects in the region, the demand growth for construction chemicals and materials, which include paints and coatings, concrete admixtures, flooring compounds, waterproofing compounds, and adhesives and sealants, etc. is expected to be ahead of the regional GDP growth up to 2020.

“While Middle East has access to most of the essential industrial resources like raw materials, utilities and human resources, it falls short of the advanced technologies that are required to make manufacturing possible,” noted Balan.

However, growth prospects remain bright for the regional chemicals industry as well, said Balan.

Value added petrochemicals and downstream plastic conversion sectors are likely to be the key growth drivers; both are positioned to benefit from large-scale investments and incentives from the market participants and the local governments.

Word-scale plants and integrated chemical complexes are being set up at the newly developed industrial cities, mostly in the KSA and Qatar. Feedstock advantage in the Middle East, in addition to its strategic location bridging the emerging eastern markets and developed western markets, are attracting the key global players to establish their manufacturing assets in the Middle East.

Supporting this trend is an increase in collaboration efforts between the local and the international chemical companies. All these factors depict accelerating growth for the chemicals Industry in the Middle East, Balan said.

The Middle East is known to account for close to half of world’s known crude-oil reserves, and over one-third of natural gas reserves. Investments in excess of $ 770 Billion are planned in the Middle East from 2011 to 2020, Frost & Sullivan said.

About 53 per cent of the total investment is projected to be in the GCC member nations, while the rest is predominantly being shared by Iran and Iraq.

Oil and gas production, and allied industries including petrochemicals, refining and midstream operations are estimated to account for over 65 per cent of the total outlay. – TradeArabia News Service