Why plastic is still fantastic
Published on 08 Jan 2017
Demand for plastics in the region mainly comes from packaging firms and the infrastructure industryDespite the recent shifts in oil prices adversely impacting certain sectors, the petrochemicals industry in the UAE is poised to grow at an average rate of about five to six per cent over the next decade, say industry players.
"The Middle East is a very important area for the petrochemicals segment and we expect that the demand for plastics in the region this year will increase by five per cent. We still believe that the average growth in the segment will be between five to six per cent in the next five to 10 years, and we are optimistic on further growth," said Wim Roels, CEO of petrochemical company Borouge.
Speaking on the sidelines of the ArabPlast 2017 exhibition, Roels explains that the demand for plastics in the region mainly came from packaging firms and the infrastructure industry. "The infrastructure segment in particular has traditionally shown a very strong growth, and demand for pipes and power cables has always driven the segment," he said.
Roels also noted that a recent trend that has quickly become a critical focus point has been sustainability. "Sustainability will be a key driver for many firms in the years to come, not just in the products manufactured, but also in the manufacturing and operation processes. This is where the innovation in the industry is taking place."
ArabPlast 2017 kicked off on Sunday at the Dubai International Convention and Exhibition Centre, with Majid Saif Al Ghurair, chairman of the Dubai Chamber, inaugurating the show.
"The UAE [in general] and Dubai [in particular] are a global trade hub where manufacturers are looking to Dubai for the distribution of their products and the formulation of strategic partnerships, not to mention gaining access to many vital markets thanks to its advanced infrastructure in transportation, distribution, logistics and warehousing," Al Ghurair said.
"The manufacturing sector achieved positive growth in 2016 in Dubai. World-class techniques in petrochemicals, plastics and rubber are being practised in the UAE and the wider Gulf. This comes at a time Dubai is always opening up new markets, such as in Africa and Latin America as well as it enhances the potential of existing markets such as India," he added.
Satish Khanna, general manager of Al Fajer Information and Services, co-organiser of the exhibition, said that even as the "industry has not been very vibrant right now" because of the fluctuations in oil prices, things are already looking up.
"The market is bouncing back and starting from this year, I am predicting a growth of 7.5 to 10 per cent," he said. "The bulk of the demand will continue to come from the packaging industry, which is growing at a steady rate in the region. Also, a clear rise in demand can also be seen in the pharmaceutical sector, which is slowly shifting away from using glass products to plastic products."
According to the International Energy Agency, oil demand for petrochemicals is likely to grow by about three per cent a year between 2015 and 2021, with petrochemicals taking a more significant proportion of the oil barrel.
"The UAE enjoys two differential advantages over Asia and Europe that facilitates the production of petrochemicals: feedstock and logistics; which facilitate to attract new investments and alliances to the region," said Khanna.
Regional governments continue to support the growth of this sector and encourage investments in its sub-sectors. "Downstream plastic industry is one of [such sectors] as the UAE is highly investing in five major industries including automotive, consumer appliances, plastic packaging, construction and metals processing," he added.
On its first day, the three-day ArabPlast 2017 registered strong participation, bringing together 972 companies from 39 countries, and 12 national pavilions, an increase of 12 per cent in terms of overall display area and 18 per cent in the UAE's presence compared with 2015 edition.