After global headwinds in 2019, demand for crude oil has fallen sharply due to the COVID-19 virus in 2020 which chas created economic slump worldwide. These widespread lockdowns have forced businesses to close and restricted people to move which automatically translated to less demand for oil pushing the prices down.
The Organisation of the Petroleum Exporting Countries (OPEC) crude oil basket price – tried to mitigate the risks of declining demand and prices, by agreeing with Russia and nine other non-OPEC members, to reduce supply by 9.7m barrels per day.
In 2021 the global economy began to gradually recover as countries opened their borders and vaccination was rolled out. Currently due to the ongoing geopolitical tension has pushed the prices to skyrocket which could be beneficials to producers who have. It is expected that this year Asia, mainly China, will continue to lead petrochemical plant expansions. There is a chance that China has the capacity to struggle with the paraxylene and purified terephthalic acid markets as well as the polyester supply chain. Meanwhile, both Europe and the US are looking to Asian PX to set a trend. However, S&P Global reports that the “overcapacity in Chinese PX and PTA makes this a challenging market in which to operate for producers.”
The UAE’s Industrial Strategy aims to increase the GDP from AED 133 billion to AED 300 billion by 2031, petrochemicals is expected to make a big part of this strategy.The UAE has put in place a circular economy policy and a council to oversee its implementation starting at the beginning of 2021. This policy provides a framework to work on circular economy through many leading sectors including but not limited to petrochemicals.
At DP World UAE’s petrochemical hub accounts for approximately 60 percent of Dubai’s total trade value in the sector and it is valued at AED21.4 billion.
The aim is to be part of the policy which was developed jointly by several ministries, including the Ministry of Climate Change and Environment (MoCCAE), the Ministry of Economy, the Ministry of Cabinet Affairs, and the Office of the Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications.
Petrochemicals in Jafza
DP World UAE has been playing a crucial role in facilitating the growth of the regional and global petrochemicals sector through Jebel Ali.
Our UAE’s comprehensive solutions include tank terminals, warehousing, specialised storage space for packed lubricants, fuels and industrial chemicals, ISO tanks storage and dangerous goods warehouses.
The petrochemical sector spans an area of 3.9 million sqm of combined facilities, 8,000sqm of warehouse space, and 15, 200sqm of occupied office space, hosts petrochemical industry companies that are keen to grow fast.
The 532+ petrochemical sector in Jafza is powered by 584 companies from 60+ countries with a 6000 workforce, all of which contribute to Dubai’s position as the second-most important emirate in terms of petrochemical production. Jafza’s prime, strategic location helps these companies grow economically as Dubai links the East and the West. Therefore, the free zone attracts oil and gas companies from everywhere in the world, allowing it to contribute approximately 70 per cent to the UAE’s foreign trade through petrochemicals.
The Port of Jebel Ali, as an example, allows the petrochemical industry to service Over 4,700 customers. The Jebel Ali Port alone supports 65 per cent of GCC’s polymer exports and 33 per cent of its petrochemical exports. The port has 2 million square metres of liquid chemical handling capacity comprising 11 berths and over 1 million cubic metres of liquid bulk storage space.
Global supplies is attached to the downstream demand: Asian markets see styrene plants start up/European downstream demand set to recover.
Under pressure production margins due to high gas prices, Unclear supply due to weather-related outages.
higher upstream energy costs in Europe, Asian market might face lower downstream derivative margins.
supply challenges, pressure from softer downstream demand in the US.
European suppliers target sales to US markets, China’s butadiene capacity is expected to increase around 7% in 2022