Downstream
opportunities in polypropylene
Port
Spain
Petroleumworldtt.com
12 09 07
One
of the key objectives for the economy of T&T
has been to develop downstream opportunities from
the energy sector. Despite the existence of a mature
petro-chemical and metals industry in T&T,
the vast majority of production is still exported
as raw primary products. This has meant that T&T
has missed out on valuable opportunities to add
value to our natural resources through further
manufacturing processes in the domestic economy.
In recognition of this the Government has taken
a firm policy decision that approval for new petrochemical
and metal plants would only be granted if those
plants had a value-added downstream component.
Since that decision, the T&T downstream project
portfolio includes the Methanol Holdings Trinidad
Ltd AUM complex, the Essar Steel complex and the
Alutrint project. The Government is also exploring
the possibility of the development of a polypropylene
complex with international investors.
Given the public concern over gas reserves, it
should be noted that a polypropylene plant of the
scale being explored would require about 100 million
cubic feet a day. This equates to about 13 per
cent of what Atlantic LNG train IV processes and
is only about 2.5 per cent of current natural gas
production.
The
polypropylene complex opens the window for T&T
to enter into the global plastics industry. If
the opportunities from the polypropylene plant
are to be maximised, local entrepreneurs, especially
in the manufacturing sector, need to know what
would be required to set up a business downstream
of polypropylene. This information would include
things like start-up cost, potential markets, cost
structure, potential profit margins and labour
requirements.
In
recognition of this need for information, last
month, the STCIC in collaboration with the National
Energy Corporation (NEC), the TTMA, E-Teck, Basell
and Lurgi hosted a breakfast meeting entitled “Downstream
opportunities in polypropylene.” The feature
address at this meeting was delivered by Professor
Ken Julien and presentations were made by John
Nash of AMI consultants and Enrico Beccarini of
Basell. The presenters gave an overview of the
global plastics industry with emphasis on polypropylene
and provided details of opportunities that could
be capitalised on by T&T’s entrepreneurs.
Demand for plastics
The data presented by AMI consultants indicate
that globally, growth in demand for plastics is
robust. In 1983, global demand for plastics was
slightly less than 100 billion pounds. By 2010,
global demand is expected to be approximately 500
billion pounds; an almost fivefold increase. The
products for which there is the biggest demand
are polyethylene and polypropylene which have a
variety of uses and applications.
Global
demand for polypropylene is expected to increase
from about 90 billion pounds a year in
2005 to about 120 billion pounds in 2010. The area
of largest demand for polypropylene is Asia which
includes the automobile manufacturing centers in
Japan and China. AMI estimated that demand for
polypropylene in the Caribbean/ Latin American
region in 2006 was approximately 2.2 million tonnes
with growth in demand at ten per cent per annum.
Given its location and competitive energy sector,
T&T is well posied to take advantage of these
opportunities.
Uses of polypropylene
Polypropylene is the most widely used polymer
in injection molding. Molded products made from
polypropylene include: crates, garbage bins, container
caps, medical containers, shampoo bottles, kitchen
utensils, disposable cutlery, vacuum cleaners,
coffee percolators, garden chairs, stadium seats,
DVD packaging etc. The main use of polypropylene
in injection molding, however, is in the automobile
industry.
Plastics and, in particular, polypropylene have
replaced metals in automobiles and, in so doing,
have made vehicles lighter and hence more energy
efficient. For example, car bumpers which were
once made of metal are now made from polypropylene.
In a carbon-conscious world, lighter automobiles
mean less energy requirements which translate to
lower carbon emissions.
Polypropylene
is also used in extrusion molding to produce
film, fibers and pipes including hot
water piping. Since its melting point is 165ºC,
polypropylene is also suitable for making hot water
pipes.
The
market conditions are right for the use of polypropylene
to manufacture downstream products
in T&T which can be sold locally or can be
exported. AMI Consultants has concluded that T&T
has the potential to develop a significant plastics
processing industry based on increasing regional
demand. What is needed now is for local entrepreneurs,
especially those in the manufacturing sector already
involved in plastics and packaging, to examine
the information provided and to make the most of
the opportunity.
Given
that we are some five years away from the start
of polypropylene production, T&T’s
entrepreneurs have sufficient time to do feasibility
studies and to draft comprehensive plans around
these ideas. Some of the information to inform
their decision has already been provided by AMI
Consultants and Basell.
The
presentations by AMI Consultants and Basell on “Downstream opportunities in Polypropylene” can
be downloaded from the STCIC member’s zone
www.stcic.org
Polypropylene business case
Using
comparative data for the US, Germany, France
and the UK, it was projected that based on our
population size, T&T could reasonably have
a downstream plastics industry with sales of $US
500 million from 50 companies employing some 3000
people.
These figures were presented to simply give a
guide to the potential size of an industry based
on the conversion of polypropylene into downstream
products.
This
does not, however, take into account the presence
of already established companies in T&T
in the plastics business that would benefit from
lower raw material cost and enhanced supply chain
efficiency; as raw materials would be available
locally.
Other data presented indicates that a typical
extrusion company is likely to employ 50 people
and have a turnover of $US5 million to $US15 million.
The typical injection molding company would employ
25 people and would have a turnover of $US1 million
to $US 5 million.
The start-up capital cost for various types of
plastic plants are included in the table above.
These data are obviously valuable in making a business
case to banks and potential investors.
Story from
The Trinidad Guardian
Trinidad
Guardian
Thursday 6th December, 2007
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