The Algerian petrochemicals industry is set for a surge in capacity this year with two new petrochemicals complexes due to come onstream, turning the country into a net exporter of certain polymers and methanol, according to BMI's latest Algeria Petrochemicals Report.
Positive developments are expected in 2014 with the start-up of the 1mn tpa methanol complex, planned by Sonatrach and being built by a consortium of companies led by Kuwait's Qurain Petrochemical Industries Company (QPIC), which was pushed back from 2012 due to the restructuring of Sonatrach. The completion of the Arzew petrochemicals complex was also officially delayed until 2014, ostensibly to coincide with a full recovery in the European market and avoid the negative effects of the massive increase in Asian and Middle Eastern capacities in 2009-2011. While BMI has included the Arzew complex in the 2014 forecast, we caution that there may be further delays, as the investors have given no new word on progress for over a year.
- BMI sees an ongoing improvement in the Algerian construction sector feeding into higher polymers consumption rates. The construction sector performed well in 2013 and we see this trend to continue into 2014 due to strong government spending on infrastructure underpinned by strong revenues from oil and gas resources and energy exports. Over the 10-year forecast period we expect average y-o-y growth will be 5.9%, from 2014 to 2023. This should boost demand for PVC in particular.
- The growing automotive industry should support increased demand for engineering plastics, particularly PP, with 2014 likely to prove to be a transformative year for Algerian auto production. Renault is to start production in Q414 and the local content used in its cars will be gradually increased over time, in line with the indigenous industry's ongoing development. This should help gradually raise the demand for polymers and synthetic rubbers within the automotive industry.
- Algeria has risen from 10th to ninth place in BMI's Middle East and Africa Petrochemicals Risk/Reward Ratings (RRRs) matrix with its score rising 7.6 points to 48.2 points due to progress at the Arzew petrochemicals complex and expectations of a growth in methanol capacity in 2014. It lies 0.8 points behind Turkey and 3.7 points ahead of Egypt.