Dubai, United Arab Emirates; January 11, 2016: While the GCC has witnessed impressive plastics industry growth resulting in high revenues, new export markets and new job opportunities throughout the last decade, plastics producers in the Arabian Gulf region will have to diversify their product portfolio to realize untapped potential of differentiated and specialized higher value
plastic products in the future, advised speakers at the 7th annual GPCA PlastiCon conference in Dubai.
“Throughout history, humans developed because stone, iron and bronze helped them build survival kits resulting in eras named after these materials,” said Mutlaq Al-Morished, Chief Executive Officer, TASNEE. “If we look at history this way, then we are indisputably in the Plastic Age. By 2020, world plastics consumption will reach 380 million tons a year, averaging 42 kilograms per person.”
According to statistics from the Gulf Petrochemicals and Chemicals Association (GPCA), plastics capacity in the Arabian Gulf region has nearly tripled in the last decade: in 2006, production capacity stood at 9.2 million tons, growing to a 26.6 million ton industry in 2015. This development is a 11.7% cumulative annual growth rate during the 2006- 2015 period.
“The GCC plastics industry is a “feed in” industry for many other sectors, providing the building blocks for automotives, food and beverage packaging among others, sectors that make products for end- users,” continued Al-Morished.
“Today, the GCC plastics industry is a commodities business characterized by mass production. The industry is moving from commodities to the production of durable goods like cars, TVs and refrigerators. While this is valuable, the industry would gain more if we would move from producing goods that are fast in design and with a short time to market, like apparel and watches. These goods are less sensitive to economic cycles and market dynamics and would pave the way for Arabian Gulf producers moving into the production of capital goods, like railways and aircrafts,” he advised.
An export oriented industry; plastics producers in the Arabian Gulf have earmarked a significant amount of their capacity for international markets, earning valuable income in the process.
According to the GPCA’s GCC Plastics Industry Indicators 2015 report, the regional plastics industry exported 20.6 million tons of product in 2015, earning US$31 billion in revenues. Of this capacity, Saudi Arabia accounts for three- quarters of the region’s export share, exporting 13 million tons of product. For the UAE meanwhile, 2015 was particularly notable as rising plastic exports in the year saw the Emirates double its exporting share to 14% of regional capacity.
“Regional plastics producers have seen much success in the last decade, building their business model around low production cost, competitively priced products and close relationships with export partners,” said Dr. Abdulwahab Al-Sadoun, Secretary General, GPCA. “This acumen and drive has led to a burgeoning plastics commodities trade exchange.”
With forecasts for the plastics industry signaling an annual growth rate of 3.2% from now till 2020, plastic producers will need to invest in diversifying and expanding their portfolio.
“Plastics producers in the Arabian Gulf have rounded up a successful decade of growth,” explained Dr. Al-Sadoun. “With regional companies facing diminishing returns and the availability of cheap raw materials to our competitors, it is no secret that we are in the midst of a challenging business environment. For regional plastics companies, diversifying the products portfolio- that feeds into industry like aerospace, automotives and even fashion- will result in hedging investments into products that are not affected by ongoing market instability.”
Now in its 7th edition, Plasticon was hosted by the GPCA. The forum attracted speakers from renowned plastic companies including QAPCO, Sadara, SABIC, Tasnee and DuPont.