Turkey Petrochemicals Report Q3 2012

The latest Turkey Petrochemicals Report warns that falling export growth and a slowdown in domestic demand will limit polymers consumption over the short term, while in the long term, the country is destined for greater self-sufficiency, which will ensure that petrochemicals imports will remain subdued over the foreseeable future.

The report examines the market’s potential as Turkey presents itself as a competitive manufacturing hub for Europe and analyses the responses of local producers in satisfying increasing feedstock demand.

In 2011, Turkey’s ethylene production capacity reached 600,000 tonnes per annum (tpa), providing feedstock for plants with capacities of 140,000tpa ethylene dichloride, 100,000tpa ethylene glycol, 80,000tpa ethylene oxide, 100,000tpa HDPE and 310,000tpa LDPE. Turkey has capacities of 150,000tpa PP, 150,000tpa VCM/PVC, 140,000tpa PTA, 135,000tpa benzene and 80,000tpa PS.

Leading Turkish petrochemicals producer Petkim’s strategic plan is to create a petrochemicals cluster similar to that of Jurong Island in Singapore where refineries supply a multitude of downstream industries. Although small by global standards, Petkim already produces terephthalic acid, ethylene glycol, acrylonitrile, PE, PVC, PP and benzene as well as controlling several plants producing finished products such as packaging, textiles, detergents and cosmetics. The construction of a 10mn tpa refinery will make it highly likely that Turkey will be able to double its petrochemicals capacity by 2018, when domestic production is set to cover 40% of demand, up from the current 25%. The new refinery will produce up to 2mn tpa of naphtha per year and will cover petrochemicals feedstock requirements, 90% of which are currently imported by Petkim.

Over the short term, Petkim plans to increase capacity at its existing petrochemical complex, raising ethylene capacity by 80,000tpa to 600,000tpa. The company plans to raise capacity at its tubular LDPE plant by 20% to 145,000tpa. Its target is to increase gross production from 3.1mn tpa to a minimum of 6mn tpa by 2018. A planned ethylene unit will double olefins capacity at the complex. Petkim is also planning to introduce products to its slate that will be made for the first time in Turkey. Over the last quarter, BMI has revised the following forecasts/views:

The construction of a 432,000tpa PET plant at Gaziantep by KOKSAN will ensure that Turkey becomes a net exporter of PET when it comes online in Q312

The construction of a new 200,000b/d (10mn tpa) refinery at Aliaga near Izmir now under way and Petkim is on course to help reduce Turkey’s level of chemical imports from 70-75% of domestic demand to 30%.

Turkey remains in fifth place in BMI’s Central and Eastern Europe petrochemicals business environment ratings this quarter with 48.7 points, up 0.2 points due to an improvement in its long-term external risks. This puts it 9.1 points behind Hungary and 2.3 points ahead of Slovakia.