Abstract
Of all petrochemical exporting countries, Qatar is best placed to survive the
global recession due to its
advantage in feedstock and the highly
integrated nature of the country' s petrochemical industry,
according to
BMI' s latest Qatar Petrochemicals Report.
Nevertheless, the global
financial crisis has begun to impact Qatar' s petrochemical industry over
recent
months, consistent with BMI' s prediction of a downturn from H109.
The Qatar Petroleum (QP)
subsidiary, Industries Qatar, which is the
second-largest Gulf chemical producer by market value,
posted a 90% drop
in profits to QAR100mn in Q408. The fall came amid weakening demand and
falling
prices for chemical products and a QAR330mn write-off on raw
material inventories. Its fortunes did not
improve in Q109 when net income
fell 68% y-o-y to QAR612.3mn (US$168mn). This was below the
QAR668mn
forecast by Shuaa Capital, but above the QAR407mn predicted by EFG-Hermes.
The
result, nevertheless, represents an improvement in gross margins on
Q408, largely due to a drop in the
cost of sales.
Doubts are emerging
over planned projects following a decision by QP and Honam Petrochemicals
to
delay their US$2.6bn plant by one year to 2013. Previously BMI reported
that the project would be
delayed until 2012, due to problems securing
financing. There were concerns that it may not go ahead at
all after the
partners said they were putting the plans on ' indefinite hold' . The
cornerstone of the complex
was to be a cracker with capacity of 1mn tpa of
ethylene using mixed feedstock, with other capacities
including 900,000tpa
of propylene, 700,000tpa of PP and 220,000tpa of PS. The partners have
declared
they are still planning to complete the project, but BMI is
highly cautious and mindful of Honam
Petrochemical' s own problems with
rising losses, although it has little or no debt.
Qatar remains in second
place in the rankings for Middle East and Africa with 64.2 points, up 3.0
points
on the previous quarter as a result of a statement by Honam
Petrochemical and QP that they would go
ahead with their planned
petrochemical complex, having put it on indefinite hold in the previous
quarter.
This puts it 4.5 points ahead of the UAE and 10.1 points behind
Saudi Arabia. Qatar' s progress in raising
its petrochemical capacity could
still falter due to rising construction costs and tightening lending
conditions. Nevertheless, Qatar' s petrochemical-specific ratings are strong,
with cracker capacity set to
increase significantly over the next five
years and the country hosting the second-largest polyolefins
production
capacity in the GCC after Saudi Arabia. Underpinned by one of the highest
levels of GDP per
capita in the world and no history of political tension,
Qatar remains a bastion of stability in a highly
turbulent region. Qatar' s
weakness is its relative lack of economic diversification compared to
other
countries in the region.
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