GCC fer­tiliser pro­duc­tion ca­pac­ity surges by 12%

Times of Oman - - MARKET - Times News Ser­vice

MUSCAT: Fer­tiliser pro­duc­tion ca­pac­ity in the Gulf Co­op­er­a­tion Coun­cil (GCC) re­gion has reached 42.3 mil­lion tonnes per an­num in 2017, ris­ing by 12 per cent over the pre­vi­ous year, a new re­port by the Gulf Petro­chem­i­cals and Chem­i­cals As­so­ci­a­tion (GPCA), the go-to source for in­dus­try data, has said.

Ac­cord­ing to the re­port en­ti­tled, “2016 GCC Fer­tiliser In­dus­try In­di­ca­tors,” the in­dus­try ex­panded at the high­est growth rate year on year since 2011, and fur­ther out­paced over­all an­nual growth of 8 per cent per an­num over the past decade.

Ca­pac­ity ad­di­tions in 2017 are mainly driven by Saudi Ara­bia, the largest fer­tiliser pro­ducer in the re­gion, with projects like Waad Al Shamal, a $7 bil­lion joint ven­ture be­tween Ma’aden, SABIC and Mo­saic, com­ing on stream.

$5.2b sales rev­enue

In 2016, the GCC fer­tiliser in­dus­try gen­er­ated $5.2 bil­lion in sales rev­enue, with plans to in­vest $8 bil­lion in new projects over the com­ing years. By 2025, re­gional ca­pac­ity is ex­pected to reach 49.8 mil­lion tonnes, grow­ing at a steady rate of 2 per cent per an­num. Of the ad­di­tional 7.4 mil­lion tonnes of fer­tiliser ca­pac­ity to be added be­tween now and 2025, 95 per cent will come from Saudi Ara­bia, grow­ing the coun­try’s share in re­gional fer­tiliser pro­duc­tion to 58 per cent, up from 51 per cent cur­rently.

GCC fer­tiliser ex­ports have also been grow­ing at 7.3 per cent per an­num over the last decade. These ex­ports ac­count for about a third of the chem­i­cals ex­port vol­ume, with 90 per cent sold in in­ter­na­tional mar­kets.

Growth in fer­tiliser ex­ports has a sig­nif­i­cant mul­ti­plier ef­fect through­out the lo­cal econ­omy gen­er­at­ing an es­ti­mated $6.7 bil­lion in sup­port­ing in­di­rect eco­nomic ac­tiv­ity in the re­gion, in­clud­ing sup­port­ing ser­vices, pack­ag­ing, ware­hous­ing and dis­tri­bu­tion.

The GCC fer­tiliser in­dus­try has also con­tributed to growth in nonoil ex­ports, ex­pand­ing sales in in­ter­na­tional mar­kets.

Emerg­ing economies

Eco­nomic growth in emerg­ing economies has been an im­por­tant driver of this ex­pan­sion. In 2016, GCC re­tained its po­si­tion as the world’s largest urea ex­porter with a global mar­ket share of 32 per cent and the sec­ond largest ex­porter of di­ammo­nium phos­phate (DAP) with a share of 14 per cent.

Dr. Ab­dul­wa­hab Al-Sadoun, sec­re­tary gen­eral, GPCA, com­mented, “Much like any other fer­tiliser pro­duc­ing re­gion glob­ally, the GCC fer­tiliser in­dus­try’s sales rev­enue has been af­fected by an over­all de­cline in com­mod­ity mar­kets, drop­ping by an es­ti­mated 21 per cent from the year be­fore. None­the­less, the in­dus­try has re­mained re­silient de­spite volatil­ity in global mar­kets, con­tin­u­ing to ex­pand with a com­mit­ment to long-term projects, grow­ing ex­port vol­umes and sig­nif­i­cant in­vest­ment in niche, high-value and en­vi­ron­men­tally friendly fer­til­izer prod­ucts. Fur­ther­more, the con­tri­bu­tion of the fer­til­izer in­dus­try to re­gional progress goes much be­yond fi­nan­cial growth, play­ing an im­por­tant role in sup­port­ing food se­cu­rity and job cre­ation.”

Em­ploy­ing around 54,900 peo­ple di­rectly and in­di­rectly, na­tional cit­i­zens ac­count for 54 per cent of the in­dus­try’s work­force. Over the past decade, di­rect job cre­ation grew by com­pound an­nual growth rate (CAGR) of 8.7 per cent per an­num, while the chem­i­cal in­dus­try grew at an over­all av­er­age rate of 6 per cent per an­num.

The “2016 GCC Fer­tiliser In­dus­try In­di­ca­tors” re­port will be re­leased at the 8th edi­tion of the GPCA Fer­tiliser Con­ven­tion, tak­ing place be­tween Septem­ber 26 and 28 at the Ritz Carl­ton, Bahrain.

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