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Chemicals in Developing and Transition Economies
Prepared for: The World BankMarch 28, 2007
Presentation
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Study Objectives
Document and confirm or correct the hypothesis that chemicals production and use have been growing and continue to grow, at an especially rapid rate among the developing and transition economies over approximately the last decadeCharacterize current chemicals production and trade in the developing and transition economies, with respect to the specific countries and the chemicals and classes of chemicals being manufactured, imported, or exported, andEstimate corresponding future trends
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Target Countries
MyanmarSri LankaPapua New Guinea
RomaniaCroatiaBulgariaAlbaniaUzbekistanTajikistanUkraineRussiaKazakhstanGeorgiaAzerbaijanArmeniaLibyaEthiopiaTurkeyTanzaniaZimbabwe
NigeriaKenyaAngolaTunisiaMorocco
AlgeriaSouth AfricaUAE(primarily
Abu Dhabi)
Saudi ArabiaOmanKuwaitIraqIranEgyptBahrainQatarJamaicaUruguayEcuadorBolivia
HungaryColombiaPeruTrinidad and Tobago
Chile
VenezuelaArgentinaBrazilPolandBangladeshPakistanVietnamPhilippinesThailandMalaysia
IndonesiaSingaporeMexicoIndiaChina (including Taiwan)
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Chemical Industry SegmentationBasic Chemicals: bulk inorganics and organics, fertilizers, intermediates, resins, elastomers, fibers and dyestuffsSpecialty Chemicals:– Adhesives, coatings and sealants– Agricultural chemical intermediates– Dyes and pigments– Specialty polymers– Food additives, including flavors and fragrances– Plastics additives– Water management chemicals– Oil field chemicals– Textile chemicals– Catalysts– Mining chemicals– Printing inks– Paper chemicals
Consumer Care ProductsLife Science Products: pharmaceuticals, crop protection chemicals, and other products from biotechnology
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Sources of data
Country embassies and consulates– Nexant diligently contacted and researched for data on
the chemical industries in target countries– The available data from embassies and consulates was
either completely non-existent or so sketchy as to not provide a basis for projections in the report
– Hence, it is not considered useful to include a summary of what types of data for which types of chemicals were obtained as requested in the World Bank comments
Historical data obtained from the UN and UNIDO provided production and trade in the groupings needed for this study: Basic Chemicals, Specialty Chemicals, Personal Care Products, and Life Science Products
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Forecasts of production, demand and trade were based on four growth models applied to each country as appropriate
Growth Model 1: Countries with basic chemical production not competitive with global leaders or non-existent chemical production. In this case, the country’s basic chemicals production is assumed to grow at less than GDP levels with imports increasing or net exports decreasing over time. Growth Model 2: Countries with a relatively strong basic chemicals production where growth in domestic demand will stimulate self-sufficiency. In this case, net exports (trade) is assumed to stay flatGrowth Model 3: Countries with a very strong and competitive basic chemicals industry. In this case the country’s basic chemicals production grows faster than GDP growth with net exports increasing over the forecast periodGrowth Model 4: Countries with strong basic chemical production with small expected growth in production in the future. In this case, the net exports grows, but at a flat rate.
These models were applied to particular countries with specific assumptions
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PROPYLENE OXIDE
Low Value High Value
Dipropylene glycol
Allyl alcohol
Tripropylene glycol
Polypropylene glycols
Propylene glycol
Isopropanolamines
Pesticides
Surfactants
Hydroxypropyl cellulose
Polyurethane intermediate
Thickeners
Acid gas scrubbingPropylene Carbonate
Antifoam agents for latex paints
Lubricants
Urethane Intermediates
Functional fluids
Acid gas scrubbing
Anionic surfactants
Fatty acid derivatives
Acrylate esters
Coatings
Humectant
Solvents
Plasticizers
Polyurethane polymers
Unsaturated polyester resins
Functional fluids
Paints and coatings
Chemical intermediate
Plasticizers
Unsaturated polyester resins
Foodstuff solvent and humectant
1,4-Butandiol (Lyondell)
Diallyl phthalate Crosslinking agent
Sample Chemical Value Chain
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China is already a dominant producer of basic chemicals
Basic Chemicals Production in Target Counties, 2005 Brazil9%
Russia7%
Other10%
China57%
India3%
Ukraine2%
Trinidad2%
Malaysia2%
Indonesia2%
Tunisia2%
Saudi Arabia4%
Q405_00753.001.11_Charts.xls\Figure 2.1
Total = 406 Million Metric Tons
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China Basic Chemical Production, 2003Thousand Tons China Basic Chemical Production, 2003
Thousand Tons Sulfuric Acid 33191Nitric Acid 1162Hydrochloric Acid (31%) 5276Caustic Soda 9399Soda Ash 11075Calcium Carbonate 2574Sodium Sulfide 493Trisodium Phosphate 898Borox 401Sodium Silicate 1250Chlorine Liquid 2718Ammonia 37946Other Fertilizer (as Nutrient) 10500Chemical Pesticides 863Ethylene 6118Propylene 5932Butadiene 858Benzene 2408Styrene 948Methanol 1989Butanol 204Formaldehyde 3090Acetic Acid 947Phthalic Anhydride 598Paint 1641Building Coatings 773Printing Ink 204Pigments 1114Dye 860Synthetic Fiber Monomer 5593Other 8627Subtotal 159650
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China is projected to become even more significant by 2020
Basic Chemicals Production in Target Counties, 2020
Indonesia1%
Russia4% China
75%
Other8%
Saudi Arabia2%
India1%
Ukraine1%
Trinidad1%
Tunesia1%Malaysia
2%
Brazil4%
Q405_00753.001.11_Charts.xls\Figure 2.2
Total = 1729 Million Metric Tons
Some energy-rich countries like Russian and Saudi Arabia will also increase share
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Basic Chemicals Net Trade, 2005-2020Basic Chemical Net Trade, 2005 and 2020
(Thousand metric tons)
-20000 -10000 0 10000 20000 30000 40000 50000 60000 70000
RussiaSaudi Arabia
TrinidadTunisia
MalaysiaUkraine
QatarBahrain
VenezuelaIran
BrazilMexico
China (Ex Taiwan)Turkey
ThailandColombia
IndiaPakistan
PolandArgentina
Thousand Metric Tons2005 2020
Q405_00753.001.11_Charts.xls\Figure 2.4
LargestImporters
LargestExporters
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Brazil, Singapore and India are currently the most significant producers of specialty chemicals
Specialty Chemical Production in Target Countries, 2005
Brazil14%
Singapore11%
Argentina3%
Other27%
Russia10%
China6%
Saudi Arabia6%
Thailand5%
Malaysia4%
Ukraine5%
India9%
Q405_00753.001.11_Charts.xls\Figure 2.5
Total = 19.1 Million Metric Tons
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The established patterns will not change dramatically going forward, but China will become more significant
Specialty Chemical Production in Target Countries, 2020
Argentina2%
Brazil11% Singapore
8%
Other35%
Russia10%
China8%Saudi Arabia
5%
Thailand5%
Malaysia3%
Ukraine5%
India8%
Total = 42.5 Million Metric TonsQ405 00753.001.11 Charts.xls\Figure 2.5
Imports from industrialized countries to these countries will continue based on knowhow
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Consumer Care Chemical Production is driven by population and standard of living
Consumer Care Chemical Production in Target Countries, 2005
Thailand1%
Brazil21%
China33%
Other5%
Iran4%
Saudi Arabia3%
Mexico19%
Argentina3%
Indonesia2%
Malaysia2%
India7%
Q405_00753.001.11_Charts.xls\Figure 2.9
Total = 57.8 Million Metric Tons
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China will show the most significant increase based on its strong economic growth and increased standard of living
Consumer Care Chemical Production in Target Countries, 2020
Thailand1%
Brazil14%
China43%
Other5%
Iran8%
Saudi Arabia4%
Mexico11%
Argentina2%
Indonesia2%
Malaysia2%
India8%
Q405_00753.001.11_Charts.xlsFigure 2.10
Total = 114.5 Million Metric Tons
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China and India are currently dominant producers of life science chemicals
Life Science Chemical Production, 2005
India20%
Malaysia2%
Other8%
China29%
Indonesia4%
Thailand4%
Brazil5%
Ukraine6%
Russia10%
Singapore7%
Mexico5%
O:\Q405_00753.001.11_Charts.xls\Figure 2.13
Total = 4.4 Million Metric Tons
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China is projected to surpass India going forward in this sector, especially in biotechnology-related areas
Life Science Chemical Production, 2020
Malaysia1%
India12%
China47%
Other13%
Singapore5%
Ukraine3%
Brazil4%
Thailand2%
Mexico4%
Indonesia4%
Russia5%
O:\Q405_00753.001.11_Charts.xls\Figure 2.14
Total = 16.6 Million Metric Tons
This area is considered relatively environmentally benign, with the exception of potential release of GMOs
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Specific assumptions in Basic Chemicals
India is expected to be within the purview of growth model 2 until 2008. In the post-2008 phase the effects of ongoing major capital investments in major commodity base chemicals in the Middle East (scheduled to come on-stream around 2008) will transform India into a growth model 1 country. Demand will increase at 1.1 times GDP, but production only at 0.9* GDP Thailand is expected to fluctuate between growth models 2 and 3 based on its position as a marginal producer of oil/gas while being a traditionally export oriented economyIran is a model 3 country resulting from world scale projects and highly competitive feedstock prices and production is estimated to grow 20% per annum and demand at 1.4 times GDPSaudi Arabia is a model 3 country expected to substantially increase basic chemicals output from 2005 onwards. Basic chemical production was projected from ethylene projections and demand estimated to grow at 1.4 times GDP growth for 2006-2020Other Middle Eastern countries (Bahrain, Kuwait, Oman, and Qatar) were classed as model 4 countries with export growth overthe forecast period projected to range between 3-13% per annum
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Specific assumptions in Basic Chemicals (ctn.)China is projected to fluctuate between model 2 and 3. Basic chemicals growth in China over the forecast period involves large capital investments due to strong derivative demand. Hence, Chinese basic chemicals’ demand growth rate based on current capital outlays and projected world scale capacity additions waspegged at 1.9 times GDP growth and net imports declining 10 % per annum. Russian basic chemicals growth was pegged at 1.1 times GDP into 2008 beyond which it is expected to grow at 1.2 times GDP given increased feedstock availability from 2008Brazil is a model 2 country. Basic chemicals demand is expectedto grow at 1.3 times GDP growth due to strong capital investments in chemicals coupled with increases in Brazilian domestic oil discoveriesTrinidad & Tobago and Venezuela are model 4 countries. Basic chemical exports are projected to grow 2 and 8 % per annum, respectively and demand at 1.1 times GDP based on cheap oil and natural gas availability
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Specific assumptions Specialty Chemicals
Specialty chemicals production growth in China is expected to exceed GDP growth (1.1 times GDP growth) while demand will grow at GDP.Specialty chemical production in India is projected at GDP whiledemand will grow at 1.1 time GDPThe export oriented economies of Malaysia and Thailand are expected to grow their specialty chemical production faster thanGDP growth by a factor of 1.1 while demand will grow at GDPHungary, Poland and Romanian specialty chemical industries are evolving from state-owned concerns into modernized specialty chemical producers owing to their strong R&D, skilled technical talent and supply linkages with domestic Eastern European plastics, paints and textile producers with duty free access into the advanced economies of the European Union. Hence, these three countries’ specialty chemicals demands are expected to grow slightly above GDP growth rates (at 1.1 times GDP)
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Specific assumptions Consumer Care Products
Demand in each country was projected to follow GDPExport growth rates were assumed for some energy-rich countries such as Bahrain, Epypt, Iran, Kuwait, Oman, Saudi Arabia, Trinidad and Tobago and VenezuelaEstablished exporters Singapore and China were assumed to increase exports modestly (2% per annum) and (4% per annum), respectivelyProduction growth rates were estimated at 0.9* GPD growth for countries seen as having weak production fundamentals such as India, Ethiopia, and Kenya