GCC PETROCHEMICALS & CHEMICALS INDUSTRY Facts & Figures 2012

GCC PETROCHEMICALS & CHEMICALS INDUSTRY Facts & Figures 2012 1 GCPA_2012_Facts_Figures_1111.indd 1 12.11.13 18:33

About The Gulf Petrochemicals and Chemicals Association (GPCA): The Gulf Petrochemicals and Chemicals Association the petrochemical and chemical industries in the Gulf GCPA_2012_Facts_Figures_1111.indd 2 12.11.13 18:33

GCC PETROCHEMICALS & CHEMICALS INDUSTRY Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 3 12.11.13 18:33

Table of Contents 1. Preface 06 2. About Chemicals Industry 07 3. GCC Chemicals Industry and Economy in 2012 11 3.1. Contribution of the chemicals industry to regional and national GDP 13 3.2. Contribution of chemicals industry to manufacturing output 20 3.3. Industries dependent upon chemicals industry 21 3.4. Share of Chemicals in non-oil exports on regional and national levels 22 4. GCC Production Capacity by Product (2008-2012) 23 4.1. GCC Capacity: Breakdown by Product Segment 26 4.2. GCC Capacity: Breakdown by Value-chain 28 4.3. Basic Petrochemicals 29 4.4. Fertilizers 30 4.5. Polymers 32 4.6. Top 10 chemical products produced in the GCC 34 4.7. Global Share of GCC top 10 Products 35 6. GCC Capacity Utilization (2011-2012) 51 6.1. Capacity Utilization by Country 52 6.2. Capacity Utilization by product segment 53 6.3. Worldwide and GCC Capacity Utilization Comparisons 54 7. GCC Chemicals Industry Growth Pattern (2012) 55 7.1. Production, Regional Consumption and International Trade 56 7.2. Chemicals industry growth performance against total manufacturing 57 7.3. International comparison of GCC chemicals production growth by product segment 58 7.4. International comparison of GCC chemicals production growth by region 59 8. Global Chemicals Industry (2012) 61 8.1. World chemicals output 62 8.2. World chemicals export by Region and Country 64 8.3. World chemicals import by Region and Country 66 8.4. World chemicals consumption by Region and Country 68 5. GCC Production Capacity by Country (2008-2012) 45 5.1. GCC Production Capacity by Country 46 5.2. Basic Petrochemicals: Breakdown by Country 47 5.3. Fertilizers: Breakdown by Country 48 5.4. Polymers: Breakdown by Country 49 5.5. Fine Chemicals: Breakdown by Country 50 9. International Trade (2012) 69 9.1. GCC Export by product segment 71 9.2. GCC Import by product segment 73 9.3. GCC Export by country 75 9.4. GCC Import by country 76 9.5. GCC Export by destination 77 9.6. GCC Import by origin 79 9.7. GCC international trade balance: breakdown by product segment 80 4 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 4 12.11.13 18:33

9.8. GCC international trade balance: breakdown by country 81 9.9. Detailed analysis of GCC exports by destination 82 major regions 85 10. GCC Intra-Regional Trade (2012) 87 13. Research and Development (2011) 109 13.1. Number of chemicals patents issued worldwide and in the GCC 110 of chemistry worldwide and GCC 112 13.3. R&D spending 114 10.1. Intra GCC export by product segment 88 10.2. Intra GCC export in total chemicals export 90 10.3. Intra GCC export in value terms 91 10.4. Intra GCC import in total chemicals import 92 11. Employment (2012) 93 11.1. Employment in GCC chemicals industry 94 11.2. International comparisons of GCC chemicals employment 96 11.3. Employment in GCC chemicals industry by occupation 98 11.4. Employment in GCC manufacturing and chemicals industry 100 11.5. Workforce nationalization in GCC chemicals industry 101 11.6. GCC employee productivity: chemicals sector and manufacturing 102 12. Sales Revenue (2012) 103 12.1. GCC Petrochemicals Industry Sales Revenue by Country 104 12.2. Share of GCC in Worldwide Chemicals Sales Revenues 106 Gulf Petrochemicals & Chemicals Association 04 5 GCPA_2012_Facts_Figures_1111.indd 5 12.11.13 18:33

A message from the Secretary General Dr. Abdulwahab Al-Sadoun 6 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 6 12.11.13 18:33

2. About Chemicals Industry Gulf Petrochemicals & Chemicals Association 7 GCPA_2012_Facts_Figures_1111.indd 7 12.11.13 18:33

9. International Trade (2012) Chemicals industry takes natural raw materials such as oil and natural gas, as well inorganic minerals such as limestone and salt and converts them into thousands of chemical products. Based on the United Nations Environmental Program, there are about 248,000 chemical products known to date. Chemicals industry serves nearly every sector of economy by providing essential inputs in the form of chemical productions or solutions. As ISIC Rev.3 Reference 2401 Manufacture of basic Chemicals Description Manufacture of basic chemicals, except fertilizers and nitrogen compounds Manufacture of fertilizers and nitrogen compounds Manufacture of plastics in primary forms and of synthetic rubber 2402 Manufacture of other chemical products Manufacture of pesticides and other agro-chemical products Manufacture of paints, varnishes and similar coatings, printing ink and mastics Manufacture of pharmaceuticals, medicinal chemicals and botanical products Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations Manufacture of other chemical products 2403 Manufacture of man- As described above, output of the chemicals industry includes base products, intermediate products, specialties Chemicals Life Cycle Chemicals life cycle starts with extraction of raw materials (mining, extraction of oil and gas and others) which a wide variety of downstream chemical products. These chemical products can, in turn, be used as feedstock for chemicals production further downstream, industrial activities and services, or production of consumer products. At any stage of life cycle, chemicals are being shipped to various locations within the country of its production or internationally. 8 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 8 12.11.13 18:33

2. About the Chemicals Industry Raw materials (oil, coal, gas, air, water, minerals) Basic inorganic and organics i.e. ammonia, gases, acids, salts Petrochemicals: Benzene, Ethylene, Propylene, Xylene, Toluene, Butadiene, Methane, Butylene Chemicals processing Fertilizers, industrial chemicals, plastics, propylene SPECIALTY CHEMICALS CONSUMER CARE PRODUCTS LIFE SCIENCE Pharmaceuticals, Agrochemicals, Biotechnology OTHER INDUSTRIES Metals, Gas, Automobiles, Textiles etc. CONSUMERS Source: OECD, 2001 Gulf Petrochemicals & Chemicals Association 9 GCPA_2012_Facts_Figures_1111.indd 9 12.11.13 18:33

9. 2. International About the Chemicals Trade (2012) Industry 2nd largest manufacturing sector Every job in the industry creates 3 additional jobs elsewhere Represents 2.9% of GCC GDP in 2012 Directly employs more than people 138,700 people 34% of all employees in the chemicals industry are national citizens Chemicals products are integral part of various industries in GCC economy $US 97.3 billion worth of chemicals output in 2012 Chemicals comprise 47% of GCC non-oil export in 2012 Production capacity of 129.2 million tons in 2012 Growth of 12.2% per annum between 2008 and 2012 10 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 10 12.11.13 18:34

3. Gulf Petrochemicals & Chemicals Association 11 GCPA_2012_Facts_Figures_1111.indd 11 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 The GCC chemicals industry: an enabler of economic development The chemicals and petrochemicals industry in the GCC plays pivotal role in the development of the regional and national economies. The industry has changed drastically in the last decades with GCC emerging as a major hub for the global chemical industry. Thirty years ago, GCC was a net importer of chemicals, whereas currently the vast majority of chemicals production exported to global markets. The chemicals industry has a large impact on the economy, particularly in terms of value addition and job creation. It is believed that the chemicals industry will play a pivotal role in enabling development as the GCC economies go through structural challenges related creation of new employment opportunities. At the heart of the chemicals industry s continued growth is the availability of, and access to, natural gas one-third of the world s oil and quarter of world s natural gas reserves are found in the region, however, competition for the natural gas from other industries such as power generation and water desalination had led to constraint in supply of the gas to the chemical industry in the GCC region. The chemicals industry plays a key role in enabling improved standards of living and quality of life. It provides the basis for a variety of economic activities within downstream industries including: textiles, plastics, agriculture, construction, oil and gas extraction, healthcare and electronics. 12 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 12 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 Chemicals industry contribution to GDP of GCC GCC: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 8.5% Construction 5.3% Crude Petroleum & Natural Gas 48.0% Finance Insurance, Real Estate 5.5% 11.1% & Business Services Source: National Statistical Authorities, GPCA Analysis, 2013 11.2% Others 9.3% Manufacturing 2.3% Refining Sector 2.9% Petrochemicals & Chemicals 4.1% Other Manufacturing Agriculture, Forestry 1.1% & Fishing GCC: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 48.6% 26.4% 53.5% 23.8% 24.9% 22.7% 25.9% 23.8% 24.2% 2008 2009 2010 2011 2012 Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 48.6% 46.0% 44.5% 25.5% 30.2% 31.3% GCC (Gulf Cooperation Council) comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates continues to play a vital role in the global and regional economy. GCC economies are the largest in the MENA region. Growth in the GCC remains robust supported by the combination of historically high oil prices, expanded oil production and low interest rates. Fiscal and external moderate and prospects for growth remain positive. However, GCC economies are heavily dependent on hydrocarbon extraction which accounts for 48.1% of the GDP. For example, Saudi Arabia is the largest oil exporter in the world and is at present the only producer with be used to stabilize global energy markets. GCC region accounted for 2.1% of world s GDP at current prices. The manufacturing sector which includes the petrochemicals and chemicals sector represented 9.3% of region s GDP in 2012. The value added contribution of the manufacturing sector in 2012 is estimated at $US143.6 billion. Out of this petrochemicals and chemicals represented 31% or $US45.2 billion in value addition to the economy. Gulf Petrochemicals & Chemicals Association 13 GCPA_2012_Facts_Figures_1111.indd 13 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 Chemicals industry contribution to GDP of Saudi Arabia Saudi Arabia: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 8.2% Construction 4.4% Crude Petroleum & Natural Gas 46.9% 4.7% 8.0% Source: National Statistical Authorities, GPCA Analysis, 2013 Finance Insurance, Real Estate & Business Services 15.8% Others 10.1% Manufacturing 2.6% Refining Sector 3.8% Petrochemicals & Chemicals 3.7% Other Manufacturing Agriculture, Forestry 1.9% & Fishing Saudi Arabia: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34.8% 39.0% 40.9% 39.1% 39.8% 36.3% 32.3% 31.7% 34.7% 37.6% 26.3% 26.8% 29.2% 25.5% 26.1% 2008 2009 2010 2011 2012 Saudi Arabia has been one of the best performing economies in the recent years, with the average rate of real GDP growth during 2008-2012 third highest behind China and India. In 2012 Saudi Arabia s economy continued to perform well with real GDP growth of 5.1%, down from 8.6% in 2011. In 2012, Saudi Arabia s GDP is estimated at $US 711 billion. The World Bank ranks Saudi Arabia as the 19th largest economy in the world, representing 1% of world s GDP. The manufacturing sector which includes the petrochemicals and chemicals sector accounted for 10.1% of Saudi Arabia s real GDP in 2012. The value added of the manufacturing sector in 2012 is estimated at $US71.6 billion. Out of this the petrochemicals and chemicals sector represents 37.6% in 2012 or $US26.9 billion in value addition to the economy. 2012 value add of Saudi Arabia s chemicals sector to economy is estimated at $US26.9 billion. Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 14 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 14 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 Chemicals industry contribution to GDP of the UAE United Arab Emirates: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 12.6% Construction 8.9% Crude Petroleum & Natural Gas 40.2% 8.0% 17.4% Source: National Statistical Authorities, GPCA Analysis, 2013 Finance Insurance, Real Estate & Business Services 3.2% Others 9.0% Manufacturing 0.9% Refining Sector 1.8% Petrochemicals & Chemicals 6.3% Other Manufacturing Agriculture, Forestry 0.7% & Fishing United Arab Emirates: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 74.4% 15.8% 79.1% 74.6% 12.0% 16.2% 69.7% 70.2% 20.2% 19.7% 9.8% 8.9% 9.2% 10.1% 10.1% 2008 2009 2010 2011 2012 In 2012, the economic recovery in the UAE continued to strengthen the country s economy. Economic growth based on real GDP has reached 4.4% year-on-year in 2012, an increase from 3.9% in 2011. In 2012 the GDP of the UAE (at current prices) was $US 384 billion. The World Bank ranks the UAE as the 32nd largest economy in the world accounting for 0.5% of global GDP at current prices. Within the GCC region, UAE s GDP per capita is third highest after Qatar and Kuwait. In 2012 the manufacturing sector of the UAE grew by 11.7% in comparison with the previous year and contributed 9% to GDP at current prices. Value addition of the manufacturing sector in 2012 is estimated at $US34.4 billion. The contribution of the petrochemicals and chemicals sector is 19.7% or $US6.7 billion in value addition to the economy. 2012 value add of UAE s chemicals sector to economy is estimated at $US6.7 billion Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 Gulf Petrochemicals & Chemicals Association 15 GCPA_2012_Facts_Figures_1111.indd 15 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 Chemicals industry contribution to GDP of Qatar Qatar: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 5.6% Construction 4.4% Crude Petroleum & Natural Gas 57.8% 3.3% 10.2% Source: National Statistical Authorities, GPCA Analysis, 2013 Finance Insurance, Real Estate & Business Services 8.7% Others 9.9% Manufacturing 2.6% Refining Sector 3.5% Petrochemicals & Chemicals 3.8% Other Manufacturing Agriculture, Forestry 0.1% & Fishing Qatar: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Qatar is world s fastest growing economy with real GDP growth of 12% between 2008 and 2012. 2012 was a year of stabilization with real GDP growing by 6.2%. Non-hydrocarbon sector was a key contributor to this growth which grew by 10% in 2012. This is in line with the National Development Strategy which revolves around in the non-hydrocarbon sectors: manufacturing, construction, transport and communications, trade and hotels, and services sectors. The GDP of Qatar at current prices was $US 192 billion. As per the World Bank ranking, Qatar is the 53rd largest economy in the world and accounted for 0.2% of global GDP at current prices. Qatar has the highest GDP per capita among other GCC states and the 4th highest globally. Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 36.4% 37.8% 52.2% 48.1% 68.7% 37.0% 19.8% 35.5% 19.6% 17.7% 28.2% 32.2% 26.7% 26.7% 13.6% 2008 2009 2010 2011 2012 The manufacturing sector, including represented 9.9% of Qatar s nominal GDP in 2012. The value added contribution of the manufacturing sector to economy in 2012 is estimated at $US18.2 billion, out of which the chemicals sector represented 35.5% or $US6.7 billion Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 Qatar is world s fastest growing economy with real GDP growth of 12% between 2008 and 2012. 16 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 16 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 Chemicals industry contribution to GDP of Kuwait Kuwait: GPD (current prices) by main economic activities, 2012 Source: National Statistical Authorities, GPCA Analysis, 2013 Kuwait: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 1.7% Construction 3.7% Crude Petroleum & Natural Gas 62.1% 5.7% 18.4% 12.0% 47.8% 51.9% 10.0% 10.4% 10.6% Finance Insurance, Real Estate & Business Services 12.0% Others 4.6% Manufacturing 2.5% Refining Sector 0.5% Petrochemicals & Chemicals 1.6% Other Manufacturing Agriculture, Forestry 0.2% & Fishing 33.8% 36.1% 32.9% 32.2% 35.5% 10.1% 56.6% 57.2% 54.4% 2008 2009 2010 2011 2012 In 2012 economic growth in Kuwait was maintained at 6.2% largely due to the oil sector where production and prices remained high. In 2012 Kuwait s oil sector grew by 10%, while non-oil sector growth was 4%. Kuwait s GDP at current prices in 2012 reached $US166.7 billion and the GDP per capita is second highest in the GCC region after Qatar and top 15th on a global level. Constituting approximately 4.6% of GDP at current prices, the manufacturing sector in Kuwait is of the Kuwait Development Plan. Kuwait s economic growth is expected to increase the demand for manufactured products. The total size of value added of manufacturing sector in 2012 is estimated at $US7.7 billion. The chemicals sector represented 10% of manufacturing value add in 2012 or $US0.77 billion. 2012 value added of Kuwait s chemicals sector represented 10% of manufacturing total. Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 Gulf Petrochemicals & Chemicals Association 17 GCPA_2012_Facts_Figures_1111.indd 17 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 Chemicals industry contribution to GDP of Oman Oman: GPD (current prices) by main economic activities, 2012 Source: National Statistical Authorities, GPCA Analysis, 2013 Oman: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 Contribution to Manufactuiring (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels 8.1% Construction 4.8% Crude Petroleum & Natural Gas 52.2% 8.6% 45.6% 5.0% 45.8% 45.0% 23.5% 7.6% 33.2% Finance Insurance, Real Estate & Business Services 11.1% Others 34.9% 44.6% 10.1% Manufacturing 3.2% Refining Sector 4.6% Petrochemicals & Chemicals 2.3% Other Manufacturing Agriculture, Forestry 1.1% & Fishing 26.2% 22.7% 45.3% 31.5% 31.8% 29.2% 32.0% 2008 2009 2010 2011 2012 Oman s economy continued to grow in 2012 supported by increased oil production and high oil prices. Overall, the IMF projected real GDP growth to have reached 5% in 2012, up from 4.5% in 2011. The non-oil sector grew by 5.8% in 2012, supported by public investment, and increased activity in services sector. The manufacturing sector in Oman has demonstrated promising growth over the past decades. It is the second largest sector after oil & gas and accounts for 10.1% of GDP at current prices. Heavy chemicals represent the majority of the manufacturing value addition. In 2012, total value added of the manufacturing sector is estimated at $US7.7 billion out of which the petrochemicals and chemicals sector s contribution was $US3.5 billion. The manufacturing sector in Oman has demonstrated promising growth over the past decades. Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 18 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 18 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 Chemicals industry contribution to GDP of Bahrain Bahrain: GPD (current prices) by main economic activities, 2012 Finance Insurance, Real Estate & Business Services 26.0% Transport, Storage & Communication 6.4% 14.1% Others 15.0% Manufacturing 3.5% Refining Sector 1.7% Petrochemicals & Chemicals 9.9% Other Manufacturing In 2012, real GDP growth in Bahrain was 4.8%. This is more than twice the 2011 level of 2.1%. The hydrocarbon sector suffered a contraction in 2012 which was offset by the growth in manufacturing and government services. Growth in the hospitality sector was the fastest in 2012 as a rebound from 2011. Wholesale & Retail Trade, Restaurants and Hotels 6.3% Construction 6.1% Source: National Statistical Authorities, GPCA Analysis, 2013 Agriculture, Forestry 0.3% & Fishing Crude Petroleum 25.2% & Natural Gas Bahrain: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 The manufacturing sector is dominated by energy-intensive industries such as aluminum, in 2012 contributed 15% of GDP at current prices. At current prices, the chemicals industry accounted for 11.1% of the manufacturing sector s GDP in 2012. Value added of the manufacturing sector in 2012 is estimated at $US4 billion, out of which the contribution of the chemicals sector is estimated at $US0.4 billion. 100% 90% Contribution to Manufactuiring (%) 80% 70% 60% 50% 40% 30% 20% 10% 54.1% 17.0% 28.9% 62.5% 63.8% 63.7% 65.6% 14.7% 13.4% 13.0% 11.1% 22.9% 22.8% 23.3% 23.3% Manufacturing sector s contribution to the GDP of 15% in Bahrain is highest among other GCC countries. 0% 2008 2009 2010 2011 2012 Other manufacturing Petrochemicals and chemicals Refining Sector Source: National Statistical Authorities, GPCA Analysis, 2013 Gulf Petrochemicals & Chemicals Association 19 GCPA_2012_Facts_Figures_1111.indd 19 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 Contribution of chemicals industry to manufacturing output GCC Manufacturing Output by Industry, $US billion 450 400 CAGR (2008-2012) 9.4% 368.5 404.1 Value of output ($US Billion) 350 300 250 200 150 100 282.6 77.6 17.7 20.6 27.5 52.1 249.2 67.0 15.7 22.0 24.6 48.1 304.5 81.5 18.4 23.8 27.2 64.1 109.5 96.0 22.0 18.3 27.8 25.8 33.4 26.5 93.9 97.4 50 87.0 71.6 89.5 108.0 114.0 0 2008 2009 2010 2011 2012 Refining Chemicals Non-metallic mineral products Food products & beverages Basic Metals Others Note: 2011 and 2012 are preliminary Source: UNIDO, Statistical Authorities, GPCA Estimates, 2013 Traditionally, the manufacturing sector in the GCC has been viewed as integral part of economic infrastructure and resources were the factors driving industrial growth in the region. Regional oil & gas chemicals industry. These two sectors represent more than half of the total manufacturing output which was estimated at $US404.1 billion in 2012. Due to production capacity expansions and surging prices, the is the second largest manufacturing sector in the region and in 2012 represented approximately 24% of the region s manufacturing output. Between 2008 and 2012 chemicals output grew at an average of 16.9% per annum, higher than in any other sector. As a result, the share of chemicals industry in total manufacturing output has increased from 18% in 2008 to 24% in 2012. Chemicals sector is the second largest manufacturing sector in the GCC. 20 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 20 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 Industries dependent upon chemicals industry Value of chemical inputs supplied to GCC industries 2012, $US million Crude Petroleum, Natural Gas, Mining Wholesale & Retail Trade, Restaurants and Hotels Real Estate & Business Services Agriculture, Forestry & Fishing Basic metals Manufacturing Electricity and Water Rubber & Plastic Products Manufacturing Construction Coke & Refined Petroleum Non-metallic mineral products Wearing Apparel Manufacturing Electrical Machinery Manufacturing Machinery & Equipment Manufacturing Food products & beverages Manufacturing Paper & paper products Manufacturing Wood Products Manufacturing Textiles Publishing & printing Furniture Manufacturing Motor Vehicles Other transport equipment Medical, Precision & optical instruments 4'305 3'886 3'707 3'304 3'232 2'051 1'362 1'216 781 741 691 502 479 303 301 199 87 76 75 18 9'229 22'529 Note: Includes chemicals inputs of imported and locally produced chemicals. GCC chemicals sales by industry are estimated based on the chemicals consumption by industries and their relative value added for economies with available data. Source: GPCA Estimates, 2013 Chemicals products are an integral part of various industries. Looking downstream, the economy depends upon chemicals industry at four levels: 1. Actual production of chemicals; 2. Industries manufacturing industrial products that purchase chemicals and use them to make these products that are the raw materials or intermediate inputs for other industries; 3. Industries manufacturing consumer products and or buy industrial parts and components based on chemistry; 4. Wholesale, retail and service industries based on chemistry-derived products Source: American Chemistry Council Almost every industry procure products or services that originate from the chemicals industry. An example is the GCC oil & gas production sector accounts for 48% of the regional GDP and uses a variety of chemicals in the oil production process. The main chemicals used in the oil & gas sector are drilling and well chemicals, production chemicals, injection chemicals, pipeline chemicals, gas treatment chemicals and utility chemicals. Chemicals consumption by GCC oil & gas production and mining is estimated at $US22.5 bn. Most manufactured goods are directly touched by chemistry. Within GCC manufacturing, the largest users of chemicals are rubber & plastic products manufacturing, non-metallic mineral products. In addition to the chemicals sales to be used as raw materials in rubber and plastics production such as synthetic rubber and of basic chemicals such as chlorine, caustic soda, and titanium dioxide, there are number of specialty chemicals used in the production. Rubber processing chemicals are functional chemicals are used to facilitate processing or to improve the accelerators, activators, anti-ozonants, antioxidants, stabilizers, and vulcanizing agents, among others. Plastic additives include chemicals that are added to plastic resin to facilitate processing of plastic resin products. Some of them are antioxidants, antistatic heat and other stabilizers, lubricants, plasticizers, reinforcing agents and UV absorbers. With no natural drinking water sources, water treatment is an important area for the region. Water management chemicals used include biocides, and corrosion inhibitors. Gulf Petrochemicals & Chemicals Association 21 GCPA_2012_Facts_Figures_1111.indd 21 12.11.13 18:34

9. 3. International GCC Chemical Trade Industry (2012) and Economy in 2012 Share of Chemicals in non-oil exports on regional and national levels GCC Non-Oil Export in 2012 Qatar 68% 32% Saudi Arabia 63% 37% 53% $US 112.6 billion 47% Kuwait Oman 41% 56% 59% 44% Bahrain 22% 78% UAE 12% 88% Petrochemicals & Chemicals Other non-oil exports Source: National Statistical Authorities, GPCA Analysis, 2013 GCC exports is still highly dependent on the hydrocarbon sector which accounts for more than 80% of export value. Globally the hydrocarbon sector accounts for approximately 68% of export value. GCC non-oil export grew by an average 20% per annum between 2001 and 2012. Qatar registered the highest growth of 24% per annum during the same period, followed by the UAE and Saudi Arabia where non-oil export grew by 21.4% and 20.6% per annum respectively. As a result the share of non-oil export in the total export of goods has increased from 15% in 2001 to 18% in 2012. Examination of GCC non-oil export in 2012 shows almost half or 47% of total non-oil export value was generated from chemicals sector. Dependency of non-oil exports on energy intensive industries such as chemicals is different among GCC states. The highest dependency has been observed in Qatar where chemicals accounted for 68% of non-oil export in 2012. In Saudi Arabia, the largest chemicals production country within the GCC, chemicals accounted for 63% of total non-oil export in 2012. Similarly, the share of chemicals in non-oil export of Kuwait remains high at 56%. In the rest of the GCC countries, chemicals account for less than a half of non-oil export. Non-oil accounted for only 12% of the non-oil export. 22 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 22 12.11.13 18:34

3. GCC Chemical Industry and Economy in 2012 4. GCC Production Capacity by Product (2008-2012) Gulf Petrochemicals & Chemicals Association 23 GCPA_2012_Facts_Figures_1111.indd 23 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Introduction The chemical industry is divided into a number of broad segments. GCC chemicals production can be described by the following table: Chemicals (excluding Pharmaceuticals) Product Segments Consumer Chemicals Basic Chemicals Specialty Chemicals Intermediates Petrochemicals Inorganic Chemicals Fine Chemicals Basic Inorganics Industrial Gases Polymers Fertilizers Source: 24 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 24 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Basic Chemicals Intermediate Chemicals Petrochemicals Includes 7 major bulk (commodity) building blocks: Ethylene, Propylene, Methanol, Aromatics (benzene, toluene and xylenes) Represent next step of chemical conversion of basic petrochemicals and are used in Fine Chemicals Polymers Fertilizers Industrial Gases Inorganic chemicals Adhesives Catalysts Coatings Cosmetic Additives Crop Protection Basic Inorganics Various combinations of nitrogen, phosphorous, potassium Includes oxygen, nitrogen, argon, carbon dioxide and hydrogen. Industrial gases are widely used in the manufacturing processes with major industries including steel, chemicals production, electronics and health care Chemicals derived from metal and non-metallic minerals and don t contain carbon as principle element Specialty Chemicals Chemicals used to bond two surfaces together and are mostly supplied to automotive, construction, packaging sectors Specialty chemicals that affect the speed of chemical reaction. They are mostly supplied to Materials applied to protect or decorate surfaces and are mostly supplied to automotive, transportation, construction, packaging and other industrial sectors Functional chemicals and are used to improve performance of cosmetic and personal care products Products that help control plants from harmful insects, diseases and other related products Dyes and Pigments Industrial Additives Lubricant Additives Organic and inorganic chemicals used to impart color into other materials Functional chemicals added to aid or facilitate industrial processes and enhance properties Functional chemicals added to lubricating oils to impart special properties Paints and Inks Colored, liquid dispersions of dyes or pigments used to impart text and design Other Specialties Consumer Chemicals A number of other specialty chemicals exist Consumer Chemicals Chemicals sold directly to consumers and include chemicals products such as soaps and detergents, cosmetics GCC chemicals industry has been mostly concentrated around production of Petrochemicals, Polymers and Basic Inorganics (Fertilizers and Inorganic Chemicals). They account for about 90% of the total chemicals production in the region. Gulf Petrochemicals & Chemicals Association 25 GCPA_2012_Facts_Figures_1111.indd 25 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) GCC Capacity breakdown by product segment Current production of GPCA member companies can be grouped into the following product segments and sub-segments: Petrochemicals including: basic petrochemicals intermediates polymers Basic Inorganics including: fertilizers inorganic chemicals Specialty Chemicals I Petrochemicals Segment: Basic petrochemicals or commodity chemicals are produced in large quantities. They are the basic building blocks derived from hydrocarbon feedstock and are used to produce other chemical products. In 2012, GCC basic petrochemicals capacity reached 44.1 million tons per annum which accounts for 34.1% of the regional chemicals capacity. Between 2008 and 2012, regional producers have expanded their basic petrochemical production capacities by an average rate of 13.2% per annum. This is higher than the overall chemicals capacity growth of 12.2% per annum. Petrochemical intermediates represent the next step in the chemical conversion of bulk petrochemicals and are used in downstream derivatives such as plastic GCC capacity of intermediates has reached 12.6 million tons in 2012, representing 9.8% of the total capacity in the region. chemicals which are derived from bulk petrochemicals, intermediates and other carbon sources. The is 14.8 million tons which represents 11.4% of the regional chemicals capacity. GCC polymers production is concentrated around commodity thermoplastics. Over the past 5 years polymers industry in the GCC has seen a remarkable growth of CAGR 17% reaching 23.8 million tons in 2012. After basic petrochemicals and fertilizers, the polymers segment is the third largest in the GCC chemicals industry representing 18.4% of region s total production capacity. I Basic Inorganics Segment: Fertilizers are various combinations of nitrogen, phosphorous and potassium. The major end-users of fertilizers are in the agriculture sector. Fertilizer production in the GCC is the second largest product sub-segment representing 23.3% of the total regional capacity or 30.1 million tons per annum. Over the past 5 years GCC fertilizers production capacity grew by an average 13.7% per annum. Inorganic chemicals are derived from metal and non-metal minerals and do not contain carbon as a principle element. In 2012 the GCC production capacity of inorganic chemicals reached 3.5 million tons per annum which represents 2.7% of the total capacity. I Specialty Chemicals Segment: GCC production capacity for specialty chemicals is still in the early stages of development. Specialty chemicals are produced in relatively small quantities and have specialist end-use applications. They are derived from petrochemical intermediates and other industrial chemicals. As of 2012, the GCC capacity of GPCA members was estimated at 0.24 million tons which is 0.2% of the regional chemicals capacity. 26 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 26 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) GCC Chemicals Production Capacity by Product Segment Million Tons 140 120 100 80 60 40 20 0 81.6 2.8 18.0 12.7 11.5 9.5 0.2 2.9 19.4 17.6 13.0 11.0 26.9 32.6 CAGR (2008-2012) 12.2% 96.7 0.2 110.7 3.0 20.0 0.2 121.8 3.5 27.3 20.6 21.3 0.3 129.2 30.1 23.8 14.4 14.8 14.8 11.4 12.5 12.6 41.1 42.2 44.1 2008 2009 2010 2011 2012 3.5 0.3 Basic Inorganics Petrochemicals Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 GCC Chemicals Capacity by Product Segment 2012 Total: 129.2 million tons Polymers 18.4% Petrochemicals 73.7% Fine Chemicals 11.4% Intermediates 9.8% 23.3% Fertilizers 2.7% Inorganic chemicals Basic Inorganics 26.0% 0.2% Specialty Chemicals Basics 34.1% Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Gulf Petrochemicals & Chemicals Association 27 GCPA_2012_Facts_Figures_1111.indd 27 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) GCC Capacity breakdown by value chain GCC Chemicals Capacity by Value Chain Million Tons 140 120 100 80 60 40 81.6 8.4 7.1 32.2 0.5 3.4 CAGR (2008-2012) 12.2% 96.7 9.8 11.8 39.0 0.6 3.5 110.7 12.0 14.4 45.8 0.7 3.6 121.8 13.3 14.7 47.3 0.7 7.0 129.2 14.5 15.5 49.9 0.7 7.0 20 0 30.0 32.0 34.2 38.8 41.6 2008 2009 2010 2011 2012 C1 Methane C2 Ethylene C3 Propylene Aromatics Inorganics C4 Butadiene Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 A wide range of chemicals products are the result of the processing of organic and inorganic raw materials. The majority of chemicals products in the GCC use organic inputs such as oil and natural gas, which contain hydrocarbons. Organic chemicals in the GCC are represented by Methane (C1), Ethylene (C2), Propylene (C3), Butadiene (C4) and Aromatics value chains. Chemical products based on the ethylene (C2) value chain represent the majority of the regional output and accounted for 38.6% of the total GCC Capacity in 2012. This is equivalent to 49.9 million tons of production capacity as of end of 2012. Currently the ethylene value chain in the GCC is represented by more than 60 different chemicals which aid various industries which include food packaging, housewares, automotive, insulations and other. comprised of methane (C1) based chemicals which accounted for 32.2% of the total GCC capacity in 2012 or 41.6 million tons per annum. There are approximately 50 different chemicals within the methane value chain produced in the GCC. This product group supplies products to the building materials, plastics and agriculture industries. GCC capacity to produce propylene (C3) based products reached 15.5 million tons in 2012 which accounted for 12% of region s total. With a low capacity base in the region, there are approximately 45 propylene based products currently produced in the GCC. Propylene based products serve as a basis for products used in many downstream industries including automotive, telecommunications, printing and coatings. Over the past 5 years the production of propylene (C3) based chemicals has seen an expansion of CAGR 21.7% which the highest when compared to other product groups. Similarly to propylene (C3) based chemicals, the aromatics value chain represented a minor share of the total regional capacity in 2012, accounting for 11.2%. With approximately 55 different chemicals produced from benzene, mixed xylenes and toluene, this group supplies a variety of industries from packaging to apparel, pharmaceuticals and spare parts. Similarly to the propylene (C3) value chain, the chemicals currently produced when compared to the ethylene (C1) and methane (C2) groups. Inorganic chemicals accounted for 5.5% of the total capacity in the region in 2012. There are more than 30 inorganic chemicals currently produced in the GCC. The inorganic products segment has been expanding at an average 20.3% per annum over the past 5 years. 28 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 28 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Basic Petrochemicals capacity breakdown by product GCC Basic Petrochemicals Capacity by Product Million Tons 45 40 35 30 25 20 15 26.9 2.2 3.5 8.0 0.1 0.4 CAGR (2008-2012) 13.2% 32.6 2.3 5.7 8.2 0.1 1.2 41.1 3.1 6.4 0.3 2.2 42.2 3.1 6.7 9.3 9.4 0.3 2.2 44.1 3.1 7.2 9.3 0.3 2.5 10 5 12.7 15.0 19.8 20.5 21.7 0 2008 2009 2010 2011 2012 Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Basic petrochemicals are comprised of bulk (commodity) chemicals produced in large quantities and are used to produce other chemicals and specialties. Due to petrochemicals capacity expansions in the region and availability of natural gas feedstock, GCC capacity of basic petrochemicals has been expanding at the compound annual growth rate of 13.2% between 2008 and 2012. In 2012 total capacity has reached 44.1 million tons per annum. More than 90% of all organic downstream chemicals are derived from 7 major bulk (commodity) chemicals. Ethylene traditionally has been the main basic petrochemical produced in the GCC. In 2012, ethylene represented the majority or 49.2% of the region s total basic petrochemicals capacity. In the GCC, ethylene is mainly used to produce polyethylene (PE) with other major users being ethylene oxide (EO), ethylene glycol (EG) and polyvinyl chloride (PVC). Methanol is the second largest commodity petrochemical produced in the region which accounted for 21.2% of the total basic petrochemicals capacity in 2012 or 9.3 million tons. Between 2008 and 2012 methanol capacity expansion of 3.9% per annum was the lowest among other commodity chemicals in the GCC. This is due to the fact that the majority of GCC methanol is being exported. Production capacity of propylene reached 7.2 million tons in 2012 which represents 16.2% commodity chemical s total. Propylene is mainly used to produce polypropylene (PP), while other users include producers of acrylonitrile (ACN), propylene oxide (PO) and cumene and acrylic acid. The Aromatics (benzene, toluene and xylenes) accounted for 13.1% of region s capacity to produce commodity chemicals in 2012. Benzene is the largest aromatics produced in the GCC with production capacity reaching 3 million tons in 2012. In the GCC, benzene is used mainly to produce styrene monomer. production capacity of xylenes and by 2012 regional xylenes capacity has reached 2.5 million tons. Gulf Petrochemicals & Chemicals Association 29 GCPA_2012_Facts_Figures_1111.indd 29 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Fertilizers capacity breakdown by product GCC Fertilizers Production Capacity by Product 35 30 25 20 15 18.0 0.5 7.6 CAGR (2008-2012) 13.7% 30.1 27.3 3.4 19.4 20.0 0.5 0.5 8.3 8.3 3.4 11.4 11.3 10 5 9.9 10.5 11.1 12.5 15.3 0 2008 2009 2010 2011 2012 Urea Ammonia Diammonium phosphate (DAP) Note: Based on nameplate capacity Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Fertilizers represent various combinations of three basic elements (nitrogen, phosphorous and potassium). Fertilizer industry insures that agricultural business have nutrients they need to grow crops to meet world s requirements for food and energy. GCC fertilizers production is mostly represented by nitrogen production with ammonia and urea accounting for 88% of the total GCC fertilizers capacity in 2012 or 26.6 million tons. Most of the ammonia is utilized to manufacture urea and which is the most important nitrogen-based fertilizer. In 2012 GCC ammonia production capacity was 11.3 million tons, growing by an average 10.6% between 2008 and 2012. GCC urea capacity in 2012 has crossed 15 million tons per annum and accounts for 50.7% of the total fertilizer production capacity in the region. (DAP) production commenced from 2011 and represents 10.8% of the regional capacity. As a Phosphorus fertilizer DAP is manufactured from mineral deposits occurring in the nature. Fertilizer s main purpose is to provide essential nutrients needed by the crops to the soil. As the majority of GCC fertilizers production is concentrated around production of single nutrient fertilizers such as ammonia and urea, nitrogen is the main nutrient provided by the GCC. As of 2012, nutrient provided by the fertilizers produced in the GCC was equal to 8.4 million tons of nitrogen nutrients. This is about 8% of the world s total nitrogen consumption which is estimated at 104-105 million tons per annum (source: IFA). GCC fertilizers production is mostly represented by nitrogen production with ammonia and urea accounting for 88%. 30 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 30 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Fertilizers Nutrients Production GCC Fertilizers Nutrients Production 10 CAGR (2008-2012) 11.8% 9.2 Nutrients Million Tons 9 8 7 6 5 4 3 5.9 5.9 0.1 0.1 5.8 5.8 6.3 0.1 6.2 7.6 0.2 7.3 0.8 8.4 2 1 0 2008 2009 2010 2011 2012 Nitrogen Phosphorus pentoxide (P2O5) Note: Nutrients productions is calculated based on production excluding captive consumption Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Fertilizer industry insures that agricultural business have nutrients they need to grow crops to meet world s requirements for food and energy. Gulf Petrochemicals & Chemicals Association 31 GCPA_2012_Facts_Figures_1111.indd 31 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Polymers capacity breakdown by product GCC Polymers Capacity by Product, Million Tons Million Tons 25 20 15 10 5 0 12.7 0.7 0.9 3.4 1.0 3.2 3.6 CAGR (2008-2012) 17% 17.6 0.7 0.9 5.7 1.4 4.2 20.6 21.3 0.7 1.0 0.9 0.9 7.6 7.6 1.4 1.4 4.3 4.3 4.7 5.7 6.0 23.8 2008 2009 2010 2011 2012 1.3 1.4 8.0 1.7 4.3 7.1 Petrochemicals Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Polymers are compounds derived from one or more petrochemical monomers like ethylene, styrene, propylene and include commodity thermoplastics, engineering resins and thermoplastic elastomers. Between 2008 and 2012, GCC polymers production capacity expanded by an average 17% per annum, which is highest among other chemical product segments. Among the numerous numbers of plastics the 5 largest volume commodity thermoplastics are: Polyethylene (LDPE, LLDPE, HDPE), Polypropylene (PP), Polyvinylchloride (PVS), Polystyrene (PS and EPS) and Terephthalate (PET). These products dominate GCC polymers production. Polyethylene (LDPE/ LLDPE / HDPE) accounted for 55.3% of GCC polymers production capacity in 2012 or 13.2 million tons per annum. High density polyethylene (HDPE) is a major polyethylene produced in the GCC and accounted for 30% of 2012 polymers production capacity. In volume terms, regional capacity of HDPE in 2012 reached 7.1 million tons. In 2012 alone GCC producers have added around 1 million tons of HDPE capacity which represents 18.8% yearon-year growth. Major users of HDPE are producers of blow-moulded products such as bottles, packaging containers, drums, car fuel tanks, toys and household goods; producers of injection-moulded products such as crates, pallets, packaging containers, house wares and toys. With production capacity of 4.3 million tons at the end of 2012, linear low density polyethylene (LLDPE) is the second largest polyethylene resin produced in the GCC. LLDPE accounted for 18.1% of GCC polymers production capacity in 2012. Over the past few years LLDPE in the GCC, hence, its production capacity between 2008 and 2012 was 8.1% per annum, the lowest among other polymers. LLDPE is mostly used LLDPE include injection-moulding products and wire and cable applications. 32 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 32 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) GCC Polymers Capacity 2012 Total 23.8 million tons PS 1.1% PVC 1.7% PET 5.7% 1.1% PC 0.6% 0.1% Polyester Fiber EPS 30.0% HDPE PP 33.7% Polythelene 55.3% 18.1% LLDPE 7.2% LDPE Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 GCC production of low density polyethylene (LDPE) has been lower than production other polyethylene grades. In 2012, LDPE production capacity reached 1.7 million tons growing by an average 14% per annum between 2008 and 2012. LDPE Capacity expansions continues at a higher rate and in 2012 alone the capacity growth rate was 21% year-on-year growth. Packing industry is the mail user of low density polyethylene (LDPE). With production capacity of 8 million tons per annum, polypropylene (PP) is the second largest polymer in the GCC and accounts for 34% of the total. PP capacity expansion over the past 5 years is one of the highest among other polymers in the region. With average annual growth rate of CAGR 23.6% between 2008 and 2012, polypropylene production has expanded from 3.4 million tons per annum in 2008 to 8 million tons per annum in 2012. GCC polymers production capacity expanded by an average 17% per annum between 2008 and 2012, highest among other chemical product segments. Gulf Petrochemicals & Chemicals Association 33 GCPA_2012_Facts_Figures_1111.indd 33 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Top 10 major products produced by the GCC chemicals industry Share of Top 10 chemical products in total capacity 2012 Others 27% 17% Ethylene MTBE 3% LLDPE 3% MEG 4% HDPE 6% 129.2 million tons 6% Propylene 6% PP 7% 12% Urea 9% Ammonia Methanol Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 GCC chemicals and petrochemicals production is represented by 78 different chemicals (not including various product grades). Among them 10 products represent the majority of the production capacity. In 2012 they accounted for 73% of region s total. Notably, three basic petrochemicals, namely ethylene, methanol and propylene accounted for 30% of the regional chemicals capacity in 2012. Ethylene production capacity in the GCC is the largest among other product and accounted for 17% of region s total. The majority of ethylene is utilized captively to produce other value-add chemicals. Methanol and propylene accounted for 7% and 6% respectively. Most of the propylene production is consumed regionally to produce polypropylene. Fertilizer product urea is the second largest product in the GCC accounting for 12% of the region s total chemicals capacity in 2012 followed closely by ammonia which account for 9%. While ammonia production is one of the largest in the region, the majority of ammonia is consumed captively to produce urea. Polymer products, polyethylene (HDPE and LLDPE) and polypropylene are also among top 10 products. HDPE and polypropylene each accounted for 6% of GCC s chemicals capacity in 2012 and LDPE accounted for 3%. While there is a regional consumption of polymers in the region, the GCC polymer industry is by in large export oriented. 2012 was 3% and 4% in the region s total chemicals capacity. 73% of region s chemicals capacity is represented by 10 products. 34 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 34 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Overview of global ethylene production Global Ethylene Production Capacity by Region (2008-2012) Africa 1.4% Latin America 5.3% GCC 11.6% 0.4% Others 22.1% Asia (Excl China) Africa 1.2% Latin America 4.7% GCC 14.4% 0.3% Others 22.9% Asia (Excl China) Europe 24.6% 2008 129.0 million tons 8.1% China Europe 21.3% 2012 150.9 million tons 13.1% China 26.5% North America 22.0% North America Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA Ethylene is one of the main basic petrochemicals and is used to produce polyethylene (PE), ethylene oxide (EO), ethylene glycol (EG), polyvinyl chloride (PVC) and polystyrene (PS) and various intermediates such as ethyl acetate.. In 2012 world ethylene capacity reached 150.9 million tons per annum representing a growth of 4% per annum since 2008. Asia is the largest ethylene producer in the world accounting for 36% of world s total. Ethylene capacity growth in Asia between 2008 and 2012 was 8.7% per annum and is one of the highest in the world and higher than the world s total growth of 4%. In 2012, GCC ethylene capacity was 21.7 million tons per annum which accounts for 14.4% of world s total. It grew by an average 9.7% per annum in comparison with worldwide growth of 4%. As a result, GCC share in the world s ethylene capacity has increased from 11.6% in 2008 to 14.4% in 2012. GCC Ethylene production capacity accounts for 14.4% of world s total Gulf Petrochemicals & Chemicals Association 35 GCPA_2012_Facts_Figures_1111.indd 35 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Overview of global urea production Global Urea Production Capacity by Region (2009-2012) Latin America 3.4% Africa 3.7% 0.3% Others North America 6.2% GCC 6.0% Latin America 3.4% Africa 3.5% 0.2% Others North America 5.8% GCC 7.9% Europe 13.7% 2009 175 million tons Europe 14.3% 2012 193.7 million tons 66.7% Asia 64.9% Asia Source: International Fertilizer Association (IFA) Production and International Trade, September 2013 Urea is the most widely used solid nitrogen fertilizer in the world. The agricultural sector is the main user of urea and accounts for more than 80% of total urea demand. World urea production capacity in 2012 was estimated to be 193.7 million tons, up from 175 million tons in 2009. The majority of these capacity additions took place in Asia and the GCC. Between 2009 and 2012, Asian countries added 9 million tons of urea capacity while GCC added 4.8 million tons. Asia is the largest urea producer in the world. Its production capacity in 2012 is estimated to be 125.7 million tons which represented 64.9% of world s total. Due to urea capacity expansion in other regions, share of Asia worldwide in urea production market has declined from 66.7% in 2009. Producers in Europe (comprised of Western, Central and Eastern Europe) produced 27.7 million tons of urea in 2012. This is 14.3% of world s total urea capacity. Between 2009 and 2012, Europe s producers added 3.6 million tons of urea capacity which resulted in compounded annual growth of 4.8% for that period. In 2012 GCC producers manufactured 15.3 million tons of urea which accounted for 7.9% of world s total. Thus making the GCC the third highest regional producer of urea. GCC s urea expansion growth rate of 13.3% per annum between 2009 and 2012 is the highest in the world. North American urea producers did not have any 2012 North American urea production capacity was estimated at 11.2 million tons, slightly higher than 10.9 million tons in 2009. Urea production capacity in Africa and Latin America are similar ( 6.7 million tons and 6.6 million tons in 2012 respectively). There was a notable expansion of urea capacity in Latin America between 2009 and 2012. Its growth of 3.7% between 2009 and 2012 was one of the highest among other regions. 36 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 36 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Overview of global ammonia production Global Ammonia Production Capacity by Region (2009-2012) GCC 4.0% 4.0% Africa 1.0% Others GCC 5.0% 3.0% Africa 1.0% Others Latin America 6.0% Latin America 6.0% North America 9.0% 2009 189.5 million tons 52.0% Asia North America 8.0% 2012 204 million tons 54.0% Asia Europe 24.0% Europe 23.0% Source: International Fertilizer Association (IFA) Production and International Trade, September 2013 Today, virtually all nitrogenous fertilizers are derived from ammonia. Ammonia is produced from hydrocarbon feedstock and is a key intermediate for fertilizer production such as urea, ammonium nitrates, ammonium phosphates and compounds. Ammonia is the only viable source of nitrogen for producing large amounts of protein. The nitrogen content of fertilizers improves both the quantity and quality of proteincontaining crops. World ammonia production capacity reached 204 million tons in 2012, representing an average growth of 2.5% per annum since 2009. Asia traditionally has been the largest ammonia producer in the world accounting for more than half of world s ammonia production capacity. In 2012, Asia s capacity to produce ammonia reached 109.3 million tons per annum which accounts for 54% of world s total. Europe (comprised of Western, Central and Eastern Europe) is the second largest producer of ammonia representing 23% of world s total ammonia production capacity or 46.1 million tons. Over the past years there have been no major ammonia capacity additions in Europe and therefore capacity growth between 2009 and 2012 is modest at 0.6%. The North American capacity for ammonia production reached 16.2 million tons in 2012, which accounted for 5% of world s total. Similarly to Europe, over the past in North America. In 2009, North American ammonia capacity was only slightly lower than 16.2 million tons which resulted in an average growth of 0.2%. This is lowest growth among other regions. Production capacity in Latin America in 2012 was 11.5 million tons, an increase from 11 million tons in 2009. While demand in Latin America has been rapidly increasing due to the strong development of the agricultural sector, ammonia capacity expansion in this region continues at slower pace of than in other regions. Between 2009 and 2012 it has registered a growth of 1.5% per annum which is lower than world s average growth of 2.5% p.a. Slightly behind Latin America, GCC ammonia capacity in 2012 was 11.3 million tons which makes GCC 5th largest among other regions. Rapid capacity expansion in the GCC from 8.3 million tons in 2009 to 11.3 million tons in 2012 has made ammonia production in the region the fastest growing among other parts of the world. Gulf Petrochemicals & Chemicals Association 37 GCPA_2012_Facts_Figures_1111.indd 37 12.11.13 18:34

9. 4. International GCC Production Trade Capacity (2012) by Product (2008-2012) Overview of global methanol production Global Methanol Production Capacity by Region (2008-2012) Rest of the World North America 2.0% Africa 3.0% Europe 7.0% 15.0% 2008 59 million tons 32.0% China Rest of the World 12.0% North America 2.0% Africa 4.0% Europe 4.0% GCC 10.0% 2012 95.5 million tons 48.0% China GCC 14.0% 22.0% 5.0% Central & Latin America Asia (Excl China) 14.0% Central & Latin America 6.0% Asia (Excl China) Source: Methanol Market Services Asia (MMSA), GPCA, 2013 Methanol is mainly used to make three derivatives: formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Other derivatives are dimethyl terephthalate (DMT), methyl methacrylate (MMA), methylamines, chloromethanes and glycol ethers. Worldwide, there are around 90 methanol plants with combined production capacity of 95.5 million tons, producing methanol from various feedstock natural gas, coal, biomass and waste.. Asian producers account for more than a half of the worldwide methanol production capacity. In 2012 they accounted for 55% of 52 million tons per annum. China is the largest methanol producer in Asia with more than 46 million tons per annum. GPCA estimates that GCC methanol capacity of 9.3 million tons represented 10% of worldwide methanol capacity in 2012, down from 14% in 2008. While production capacity of methanol in the GCC continued to expand between 2008 and 2012 by an average 3.9% per annum, worldwide growth was 12.8% per annum during the same period. This resulted in a reduced share of the GCC in worldwide While GCC methanol production capacity continued to expand between 2008 and 2012 by an average 3.9% p.a, worldwide growth was 12.8% p.a. 38 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 38 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Overview of global polypropylene production Global Polypropylene Production Capacity by Region (2008-2012) Africa 1.9% Latin America 7.1% GCC 6.6% 1.4% Others 27.1% Asia (Excl China) Africa 1.8% Latin America 5.0% GCC 12.9% 1.2% Others 26.6% Asia (Excl China) North America 16.0% 2008 51.6 million tons North America 14.1% 2012 61.9 million tons 17.2% China 20.6% China Europe 22.7% Europe 17.8% Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA Polypropylene (PP) is the second widely used polymer after polypropylene (PE) with application industries including packaging, domestic appliances, automotive, housewares, furniture, medical and industrial. World production capacity of polypropylene in 2012 is estimated to be 61.9 million tons with almost half (47%) of the capacity located in Asia. China is the single largest polypropylene producing country in Asia. China s 2012 PP capacity is estimated at 12.7 million tons which represents 20.6% of the world total.. Combined capacity of producers in the rest of Asian countries (excluding China) reached 16.5 million tons in 2012 which accounts for 26.6% of the world total. Strong polypropylene demand in China encouraged producers to increase manufacturing capacity. As a result PP capacity in China grew by an average 9.5% per annum between 2008 and 2012. A similar trend was observed in other Asian countries, where PP production capacity has increased from 13.9 million tons in 2008 to 16.5 million tons in 2012. Polypropylene production in Europe has been traditionally high. In 2012, PP production capacity in this region was estimated at 11 million tons per annum which represents 17.8% of the world total. There were and therefore its share has declined from 22.7% in 2008 to 17.8% in 2012. North America s polypropylene capacity in 2012 is estimated to be 8.7 million tons which accounts for 14.1% of world s total. Polypropylene capacity additions in North America over the past years have been minimal. As a result the 2008-2012 annual compounded growth was 1.5% per annum. GCC region is slightly behind North America. In 2012 GCC polypropylene capacity was 8 million tons which accounted for 12.9% of the world total. The share of GCC polypropylene sector has doubled since 2008 when the region accounted for 6.6% of world s total PP production capacity. This was a result of extensive capacity additions by GCC producers which have added more than 4.5 million tons of PP capacity since 2008. Latin America and Africa remain the minor producers with 3 million tons and 1.1 million tons per annum of PP production capacity respectively. Gulf Petrochemicals & Chemicals Association 39 GCPA_2012_Facts_Figures_1111.indd 39 12.11.13 18:34

4. 9. GCC International Production Trade Capacity (2012) by Product (2008-2012) Overview of global propylene production Global Propylene Production Capacity by Region (2008-2012) GCC 3.9% 5.1% Latin America 1.5% Africa 0.4% Others 24.3% Asia (Excl China) 1.6% Africa Latin America 3.5% 4.0% Others GCC 7.0% 26.8% Asia (Excl China) Europe 23.5% 2008 90.1 million tons Europe 19.1% 2012 101.6 million tons 13.9% China 17.3% China North America 27.4% North America 20.7% Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA Propylene is one of the basic petrochemicals and serves as a building block for a number of chemical products. The majority of world s propylene is used to produce polypropylene (PP). Other consumers of propylene include producers of acrylonitrile, propylene oxide, oxo alcohols and cumene. In 2012 worldwide propylene capacity reached 101.6 million tons, up from 90.1 million tons in 2008. This represents a 6.8% annual compounded growth rate and is mostly driven by capacity additions in Asia and the GCC. GCC propylene production reached 7 MTPA in 2012 which accounts for 7% of world s total. Asia is the largest propylene producer with 44.7 million ton per annum of installed capacity in 2012. This accounts for 44% of the worldwide capacity for propylene. Driven by polypropylene capacity expansion in Asia, propylene capacity has increased from 34.4 million tons in 2008 to 44.7 million tons in 2012. GCC propylene production reached 7 million tons per annum in 2012 which accounts for 7% of world s total. Production capacity growth in the GCC between 2008 and 2012 was 19.7% per annum which is highest among other regions. 40 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 40 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Overview of global HDPE production Global HDPE Production Capacity by Region (2008-2012) Rest of the World 21.0% Africa 2.0% Latin America 4.0% GCC 10.0% 2008 34.4 million tons 12.0% Asia (Excl China) 4.0% China 26.0% North America Rest of the World 18.0% Africa 1.0% Latin America 3.0% GCC 17.0% 2012 41.7 million tons 22.0% Asia (Excl China) 12.0% China Europe 21.0% Europe 12.0% 15.0% North America Source: ICIS, GPCA, 2013 High density polyethylene (HDPE) is the largest of the three polyethylenes (PE) by volume of consumption. HDPE s properties give it higher strength compared with other polyethylene allowing a wide range of uses. Major application of HDPE is blow-moulding for products such as bottles for milk and other noncarbonated drinks, drums, fuel tanks for automobiles, toys and household goods. Because HDPE has good chemical resistance, it is used for packaging many household and industrial chemicals such as detergents, bleach and acids. In 2012, worldwide HDPE production capacity reached 41.7 million tons, up from 34.4 million tons in 2008. This capacity increment has been largely driven by Asian producers The HDPE production capacity in Asia reached 14.5 million tons in 2012 which accounts for 34% of the total globally. Over the past few years, HDPE capacity in Asia has been growing by an average 40.1% per annum the highest among all other regions. China is the largest HDPE producer among Asian countries and accounted for 12% of world s total or 5.2 million tons. North America is the second largest producer of HDPE globally. With production capacity of around 6.2 million tons, North American producers account for 15% of world s total, down from 26% in 2008. Similarly, the share of European producers has declined from 21% in 2008 to 12% in 2012. The combined capacity of HDPE producers in the GCC in 2012 is about 7.1 million tons. This accounts for 17% of world s total. Since 2008, GCC HDPE production capacity has grown by an average 26% per annum which is second highest growth rate after Asia. Since 2008, GCC HDPE production capacity grew by an average 26% p.a which is second highest after Asia. Source: ICIS, GPCA, 2013 Gulf Petrochemicals & Chemicals Association 41 GCPA_2012_Facts_Figures_1111.indd 41 12.11.13 18:34

4. 9. GCC International Production Trade Capacity (2012) by Product (2008-2012) Overview of global Monoethylene Glycol (MEG) production Global MEG Production Capacity by Region (2008-2012) North America 21.0% Europe 12.0% 4.0% Latin America 2008 21.1 million tons 30.0% Asia (Excl China) 11.0% China Rest of the World 17.0% Latin America 2.0% Europe 5.0% North America 17.0% 2012 27.2 million tons 27.0% Asia (Excl China) 13.0% China GCC 22.0% GCC 19.0% Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA Monoethylene glycol (MEG) is an important raw material for industrial applications. A primary use of MEG is in the manufacture of polyester (PET) resins, packaging, and kitchenware to engine coolants. Supported by the demand from polyester (PET) resins producers, global MEG production capacity has been growing by an average 6.5% per annum between 2008 and 2012. This expansion of MEG has been driven by the additions in Asia and GCC. Asia continues to be the largest producer of MEG accounting for 40% of the product s global capacity. Since 2008, there has been a 5.4% per annum growth of MEG production capacity in Asia. This is the highest among other regions.. GCC is the second largest MEG producing region globally and in 2012 represented 19% of the global production capacity for MEG. This is a decrease from the 2008 level of 22%. GCC is the second largest MEG producing region and represented 19% of world s production capacity. 42 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 42 12.11.13 18:34

4. GCC Production Capacity by Product (2008-2012) Overview of global LLDPE production Global LLDPE Production Capacity by Region (2008-2012) Rest of World 13.0% Africa 2.0% Latin America 6.0% Europe 16.0% 2008 22.8 million tons 10.0% Asia (Excl China) 9.0% China 30.0% North America Africa 1.0% Latin America 5.0% Europe 12.0% GCC 14.0% 7.0% Rest of World 2012 30.4 million tons 24.0% Asia (Excl China) 15.0% China GCC 14.0% 22.0% North America Source: ICIS, GPCA, 2013 Linear Low-Density Polyethylene (LLDPE) is part of along LDPE and HDPE. Globally, the majority of food and non-food packaging to produce heavy duty applications include liquid paper board coatings, wire and cable, injection moulding parts, pipes etc. Global production capacity of LLDPE reached 30.4 million tons, up from 22.8 million tons in 2008. World consumption of packaging materials created opportunities for LLDPE producers worldwide. Almost all LLDPE capacity expansion since 2008 has taken place in Asia. This has resulted in Asia having the highest capacity growth among other regions: 38.1% per annum between 2008 and 2012. This capacity expansion has increased Asia s share of global capacity from 19% of world s total in 2008 to 38% in 2012 making Asia the leading LLDPE producing region in the world. world s total production capacity, down from 30% in 2008. Similarly, the global share of European LLDPE producers has decreased from 16% in 2008 to 12% in 2012. GCC LLDPE producers continue to be the third region worldwide after Asia and North America. In 2012, LLDPE production capacity in the GCC has reached 4.3 million tons which accounts for 14% of world total. GCC LLDPE capacity growth between 2008 and 2012 of 10.9% per annum was one of the highest after Asia. LLDPE production capacity in the GCC has reached 4.3 million tons which accounts for 14% of world s total. In mature markets such as Europe and North America there have been limited capacity additions and closures of less competitive units. As a result, North American LLDPE producers accounted for 22% of Gulf Petrochemicals & Chemicals Association 43 GCPA_2012_Facts_Figures_1111.indd 43 12.11.13 18:34

4. 9. GCC International Production Trade Capacity (2012) by Product (2008-2012) Overview of global MTBE production Global MTBE Production Capacity by Region (2008-2012) North America 21.0% Latin America 7.0% 2.0% Rest of the World 18.0% China 2008 18.6 million tons 11.0% Asia (Excl China) North America 13.0% Europe 17.0% Latin America 5.0% 2.0% 2012 18.9 million tons Rest of the World 28.0% China 12.0% Asia (Excl China) Europe 19.0% 22.0% GCC 23.0% GCC Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), GPCA MTBE (methyl tertiary-butyl ether) is a chemical compound produced in very large quantities and is used as a fuel additive in motor gasoline. It is one of a group of chemicals commonly known as oxygenates because they raise the oxygen content of gasoline. Global production capacity of MTBE in 2012 is estimated to be 18.9 million tons, slightly up from 18.6 million tons in 2008. Asia is the largest producer of MTBE in the world accounting for 40% of global production capacity. Asia s production capacity growth of 8.9% per annum between 2008 and 2012 was the highest among other regions. GCC is the second MTBE producing region in the world. In 2012 its production capacity accounted for 23% of the world total. Combined capacity of GCC MTBE producers in 2012 reached 4.2 million tons which is similar to 2008 level. Global production capacity of MTBE in 2012 is estimated to be 18.9 MTPA. 44 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 44 12.11.13 18:34

5. GCC Production Capacity by Country (2008-2012) Gulf Petrochemicals & Chemicals Association 45 GCPA_2012_Facts_Figures_1111.indd 45 12.11.13 18:34

9. 5. International GCC Production Trade Capacity (2012) by Country (2008-2012) GCC Production Capacity by Country GCC Chemicals Production Capacity by Country Million Tons 140 120 100 80 60 40 20 0 81.6 4.9 10.1 57.7 CAGR (2008-2012) 12.2% 110.7 96.7 1.3 7.1 7.6 0.7 9.0 3.4 7.3 5.2 3.4 11.4 4.2 10.1 69.4 74.3 1.4 121.8 7.1 7.6 9.0 16.6 1.4 129.2 6.9 7.7 9.2 19.8 80.1 84.2 2008 2009 2010 2011 2012 1.4 The GCC chemicals industry is one of the largest manufacturing industries in the GCC and it continues to expand and diversify. In 2012, GCC chemicals capacity increased by 6.1% driven mostly by capacity additions in Saudi Arabia and Qatar. GCC capacity expansion in 2012 is slightly lower than in 2011 when region registered 10% year-on-year growth. Between 2008 and 2012 GCC chemicals capacity grew by an average 12.2% per annum. During the same period, UAE and Qatar were expanding their chemicals capacity faster than other GCC states by 19.6% and 18.4% per annum respectively. Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 CAGR of GCC Production Capacities (2008-2012) 19.6 18.4 16.9 15.9 12.2 CAGR (2008-2012) 12.2% UAE Qatar Oman Kuwait GCC Saudi Arabia Bahrain 9.9 1.6 Saudi Arabia is the largest producer in the region and represented 65.2% of the GCC chemicals capacity in 2012. From 2008-2012, there has been many capacity additions in other GCC countries. Qatar continues to be the second largest chemicals producer in the region accounting for 15.3% of the total GCC capacity in 2012. Over the past 5 years capacity expansion in Qatar has increased its share in the region from 12.3% in 2008 to 15.3% in 2012. While Oman, a relatively small player in the region accounting for 7.1%, almost doubled its production capacity from 4.9 million tons per annum in 2008 to 9.3 million tons in 2012. Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 46 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 46 12.11.13 18:34

5. GCC Production Capacity by Country (2008-2012) Basic Petrochemicals capacity breakdown by country GCC Basic Petrochemicals Capacity by Country Million Tons 50 45 40 35 30 25 20 26.9 1.4 2.2 0.4 0.6 1.3 CAGR (2008-2012) 13.2% 32.6 1.4 2.4 2.2 0.4 0.6 41.1 2.9 3.4 3.5 0.4 42.2 2.9 3.4 3.5 3.5 4.3 0.4 44.1 2.9 3.4 3.5 4.2 0.4 15 10 21.0 25.6 27.5 27.8 29.8 5 0 2008 2009 2010 2011 2012 Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Basic petrochemicals represent the largest share of the GCC petrochemicals industry. With industry expansion, regional capacity to produce basic petrochemicals has been expanding and the annual compounded growth rate between 2008 and 2012 is 13.2%. Saudi Arabia is the largest regional producer of basic petrochemicals. In 2012 its production capacity reached 29.8 million tons which represents 68% of the region s total. This is driven by the availability of primary feedstock such as natural gas and crude oil. Despite the Saudi dominance on a regional level, other countries of GCC have been expanding their capabilities which, from 2008-2012 has resulted in Qatar, Oman and Kuwait almost doubling their production capacity. Qatar is presently the second largest producer in the region with 42.2 million tons. The establishment of new producers in Qatar and capacity expansions by the existing producers has led to an average increase in capacity growth of 17.5% per annum from 2008-2012. Commodity petrochemicals capacity in Oman has been 3.5 million tons per annum for several years. Methanol and aromatics are the main commodity chemicals produced in Oman and have been key drivers behind capacity expansion in the country over the past years. Between 2008 and 2012, Oman s petrochemicals capacity grew from 1.4 million tons per annum to 3.5 million tons at present, a growth of 25.6% per annum. Likewise, Kuwait s basic chemicals production capacity remained unchanged between 2010 and 2012 and is currently close to 3.4 million tons per annum. Capacity expansion in Kuwait between 2008 and 2010 were driven mostly by ethylene and aromatics (benzene and xylenes). The UAE follows the same trend as in Oman and Kuwait. There have not been any capacity additions between 2010 and 2012, and so UAE chemicals production capacity remains at 2.9 million tons per annum. Basic petrochemicals capacity in Bahrain is 0.4 million tons per annum and is largely related to the production of Methanol. Over the past years there have not been any capacity additions in Bahrain and therefore it remains the marginal producer in the region. Gulf Petrochemicals & Chemicals Association 47 GCPA_2012_Facts_Figures_1111.indd 47 12.11.13 18:34

9. 5. International GCC Production Trade Capacity (2012) by Country (2008-2012) Fertilizers capacity breakdown by country GCC Fertilizers Production Capacity by Country 35 CAGR (2008-2012) 13.7% 30.2 Million Tons 30 25 20 15 18.0 1.0 1.3 1.7 2.8 19.4 20.0 1.0 1.3 1.7 1.0 1.3 1.7 4.2 4.8 27.3 1.0 1.3 1.7 4.8 7.7 1.0 1.1 1.7 4.8 10.7 10 4.4 4.4 4.4 5 6.8 6.8 6.8 10.8 10.8 0 2008 2009 2010 2011 2012 Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Fertilizers and crop protection chemicals together form agricultural chemicals group. Fertilizer production in the GCC is the second largest product group expanding by an average 13.7% per annum between 2008 and 2012. In 2012 alone, GCC fertilizer industry s year-on-year growth was 10.5% driven by the capacity additions in Qatar. Saudi Arabia is the largest producer of fertilizers in the GCC. In 2012, the fertilizer production capacity of Saudi producers reached 10.9 million tons which accounts for 36% of region s total fertilizer industry. With the capacity expansions taking place between 2008 and 2012, Saudi Arabia s share in region s total remained at the similar level of 36-38%. Major fertilizer projects which have come on stream in Saudi Arabia in the past few years include Ma aden Phosphate production capacity of diammonium phosphate (DAP) and ammonia. Qatar is the second largest fertilizer producer in the region. With annual production capacity of 10.7 million tons in 2012, Qatar accounted for 35% of GCC capacity. Qatar fertilizer production is concentrated around nitrogen fertilizers. Qatar is the largest urea, and second largest ammonia producer in the region. With two major expansions commencing production in Qatar over the past years, Qatar s current fertilizer plant in the largest single urea and ammonia facility in the world. Similarly, Oman s fertilizer industry focuses on the production of nitrogen fertilizers: ammonia and urea. In 2012, Oman s fertilizer production capacity reached 4.8 million tons which represents 16% of the region s total. Between 2008 and 2012, Oman s fertilizer industry grew by an average 14% per annum, which is in line with the growth of GCC fertilizer industry. Fertilizer production capacity in Kuwait, UAE and Bahrain remained unchanged over the past years: 1.7 million tons per annum in Kuwait, 1.14 million tons per annum in the UAE and 1 million tons per annum in Bahrain. As a result the share of these countries in the region s fertilizer industry over the past years has declined. Kuwait fertilizer industry s share in the regional total declined from 9% in 2008 to 6% in 2012. Similarly share of the UAE fertilizer industry has declined from 7% to 4%, and the share of the Bahrain fertilizer industry in the regional total has declined from 5% to 3%. 48 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 48 12.11.13 18:34

5. GCC Production Capacity by Country (2008-2012) Polymers capacity breakdown by country GCC Polymers Production Capacity by Country Million Tons 25 20 15 10 5 12.7 1.3 1.0 9.0 0.7 0.7 17.6 1.3 1.0 13.9 CAGR (2008-2012) 17% 0.7 0.8 20.6 21.3 0.7 0.7 1.0 1.0 1.3 1.7 2.4 2.4 15.2 15.5 23.8 1.0 2.0 2.4 17.4 1.0 0 2008 2009 2010 2011 2012 Saudi Arabia UAE Qatar Kuwait Oman Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Polymers are compounds derived from one or more petrochemical monomers such as ethylene, styrene and propylene. Polymers include commodity thermoplastics, engineering resins and thermoplastic elastomers. Between 2008 and 2012, the GCC polymers industry has achieved a remarkable capacity growth averaging 17% per annum, the highest among other chemical product segments. Saudi Arabia is the largest regional polymers producer accounting for 73% of the GCC production capacity in 2012. Last year alone, polymers capacity addition in the country was 1.9 million tons representing a 12.5% year-on-year growth. Polymers production in Saudi portfolio of polymers types and grades produced in the region. While UAE s overall petrochemicals capacity is one of the smallest in the region, within the polymers production UAE is the second largest regional producer. In 2012, the UAE represented 10% of the total polymers production capacity in the region. Over the past 5 years, polymers production growth in the UAE has registered 25.6%, the highest average annual growth rate in the region.. Qatar s polymer production is focused on polyethylene production and accounted for 8% of region s total polymers capacity in 2012. While capacity expansion in Qatar has continued over the past 5 years at an average rate of 10.6%, it was slower than in other GCC countries. Kuwait and Oman each represented 4% of the regional polymer production in 2012. Likewise Qatar, polymers capacity expansion in Kuwait and Oman was lower than the region s overall growth. Saudi Arabia is the largest regional polymers producer accounting for 73% of the GCC production capacity in 2012. Gulf Petrochemicals & Chemicals Association 49 GCPA_2012_Facts_Figures_1111.indd 49 12.11.13 18:34

9. 5. International GCC Production Trade Capacity (2012) by Country (2008-2012) Fine chemicals capacity breakdown by country GCC FIne Chemicals Production Capacity by Country CAGR (2008-2012) 6.5% Million Tons 16 14 12 10 8 6 4 2 0 14.4 14.8 14.8 11.5 13.0 0.6 0.6 0.6 0.7 1.1 1.1 0.5 0.7 1.2 1.2 1.2 0.7 0.5 1.0 0.6 12.0 12.0 12.0 10.8 9.7 2008 2009 2010 2011 2012 Saudi Arabia Kuwait Qatar UAE Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Fine chemicals are positioned between commodity chemicals and specialties, they are high value-added products. Fine chemicals play much more important role than bulk chemicals production and serve the pharmaceuticals, agrochemicals, plastics and other chemicals; the average value per ton is increasing. individual chemicals company tends to produce only a small quantity. estimated at 14.8 million tons per annum in 2012. in the region and accounted for 81.4% of the GCC chemicals in the rest of the GCC is still comparably small with Kuwait accounting for 7.8%, Qatar for 7.4% and the UAE for 3.8% of the region s total in 2012. Fine chemicals play an important role and serve the pharmaceuticals, agrochemicals, plastics and other industries. GCC production capacity of ne chemicals was estimated at 14.8 mtpa in 2012. 50 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 50 12.11.13 18:34

5. GCC Production Capacity by Country (2008-2012) 6. GCC Capacity Utilization (2011-2012) Gulf Petrochemicals & Chemicals Association 51 GCPA_2012_Facts_Figures_1111.indd 51 12.11.13 18:34

9. 6. International GCC Capacity Trade Utilization (2012)(2011-2012) Capacity utilization by country GCC Chemicals Industry Capacity Utilization by Country, % 2011 2012 Average capacity utilization 2008-2012 Bahrain 113% Bahrain 100% Bahrain 111% Kuwait 93% Kuwait 97% Kuwait 96% Oman 94% Oman 94% Oman 94% Saudi Arabia 92% Saudi Arabia 92% Saudi Arabia 93% UAE 85% UAE 91% UAE 89% GCC 92% GCC 91% GCC 94% Qatar 93% Qatar 83% Qatar 99% Note: Due to data revisions, 2011 capacity utilization has been revised from 91% to 92%. Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Capacity utilization measures the extent to which the capital stock of an industry is being employed in the production of goods. It rises and falls with the business industry s capacity utilization averaged 94%. This is higher than global average capacity utilization for the same period, which was 86%. In 2012 GCC chemicals industry has operated at 91% of its capacity which is a marginal drop from 92% in the previous year. At a country level, chemicals plants operating rates remained unchanged only in Saudi Arabia and Oman. Depending on individual characteristics, operating rates in other GCC states have either improved or declined. A decline in operating rates has been recorded in Qatar which is the second largest producer in the GCC. In 2012 its capacity utilization declined by 10 percent points on year-on-year basis. This was due to the start-up of new facilities and time required to achieve target production. The temporary nature of the low capacity utilization in Qatar is supported by 99%. Similarly, capacity utilization in Bahrain has declined from 113% in 2011 to 100% in 2012. While Bahrain accounts for the minor share of region s total production capacity, it has been utilizing a number of measures to improve its operating rates and achieve greater output. Therefore its operating performance in the recent years is highest when compared to other GCC states. Conversely, the UAE industry s capacity utilization rate has increased to 91%, an increase of 6% from 2011 and follows years of steady improvement since major capacity additions brought forward in 2010. Likewise, capacity utilization in Kuwait saw an improvement of 4 percentage points in 2012 in comparison with the previous year. With operating rates of 97%, producers in Kuwait have utilized nearly all their nameplate capacities demonstrating one of the best operating performances in the region. The largest chemicals producers in the region Saudi Arabia did not record any changes in capacity utilization in 2012 and remained at 92%. Lower fertilizer and polymer plants operating rates have been affecting the country s overall performance in recent years. However, the operating rates in Saudi Arabia in 2011 and 2012 are consistent with the historic average of 93%. 52 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 52 12.11.13 18:34

6. GCC Capacity Utilization (2011-2012) Capacity utilization by product segment GCC Chemicals Industry Capacity Utilization by Product Segment, % 2011 2012 2008-2012 Average capacity utilization Downstream Chemicals 98% Downstream Chemicals 99% Downstream Chemicals 97% Intermediates 97% Intermediates 97% Intermediates 94% Basic 96% Basic 94% Basic 94% All Products 92% All Products 91% All Products 94% Inorganic chemicals 90% Inorganic chemicals 90% Inorganic chemicals 91% Polymers 89% Polymers 88% Polymers 89% Fertilizers 84% Fertilizers 84% Fertilizers 97% Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Capacity utilization of individual product segments is affected by the business cycles and supply / demand changes. The GCC chemicals industry has been export oriented and therefore it is exposed to a number of external factors which affect operating rates. The production of basic chemicals and intermediates is least exposed to external factors because the majority of production is consumed captivity within the region. Basic chemicals and intermediates are also one of the largest product segments in the region representing almost half of the GCC chemicals production capacity. Producers of basic chemicals in the GCC utilized 94% of nameplate capacity in 2012. While this is a slight decline from 96% in 2011, it is similar to the 5 years average operating rate. Capacity utilization within the intermediate products segment is one of the highest. In 2011 and 2012 it remained at 97% and is mostly The polymers segment is another export oriented segment in the GCC chemicals industry. In 2012, when compared to 2011, polymers operating rates have slightly declined to 88% from 89%. Over the past ve years, GCC chemicals industry s capacity utilization averaged 94%. are exported overseas. Operating rates of plants at 98-99% for the second year. This suggests that the overseas demand for these products remains stable and GCC producers are able to capitalize on high value-added products. Gulf Petrochemicals & Chemicals Association 53 GCPA_2012_Facts_Figures_1111.indd 53 12.11.13 18:34

9. 6. International GCC Capacity Trade Utilization (2012)(2011-2012) Global comparison of the GCC capacity utilization GCC and Worldwide Petrochemicals Capacity Utilization, % 2012 87% 91% 2011 87% 92% 2010 87% 92% GCC Capacity Utilization Worlwide Capacity Utilization Source: American Chemistry Council, Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Capacity utilization measures the extent to which the capital stock of an industry (or nation) is being employed in the production of goods. It rises and falls overall GCC chemicals industry s capacity utilization averaged 94%. This is higher than the global average capacity utilization of 86% during the same period. Capacity utilization in chemicals industry globally remained 87% in 2012, while in the GCC it was 91%. 54 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 54 12.11.13 18:35

6. GCC Capacity Utilization (2011-2012) 7. GCC Chemicals Industry Growth Pattern (2012) Gulf Petrochemicals & Chemicals Association 55 GCPA_2012_Facts_Figures_1111.indd 55 12.11.13 18:35

9. 7. International GCC Chemicals Trade Industry (2012) Growth Pattern (2012) Trends in GCC chemicals production, trade and consumption growth GCC Production, Trade and Consumption Growth 8.2 9.2 8.3 11.4 10.4 5.8 Production Consumption International Trade Growth (2005-2008) Growth (2009-2012) Note: Export excludes intra-regional trade; Consumption includes captive consumption and intra-regional trade Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 During the period from 2009 and 2012, GCC chemicals production and consumption registered higher growth rates when compared to the period from 2005 to 2008. In the production side, an increase in the growth rate from 8.2% in the time span 2005-2008 to 9.2% in the timeframe 2009-2012. Likewise, GCC chemicals consumption growth rate between 2009 and 2012 is 2.5% higher than the chemicals consumption growth rate between 2005 and 2008. In contrast GCC chemicals exports growth rate during the period of 2009 and 2012 has declined by 1% from 11.4% to 10.4%, indicating an increase in the regional consumption by the downstream industries. 56 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 56 12.11.13 18:35

7. GCC Chemicals Industry Growth Pattern (2012) GCC Chemicals growth performance against total manufacturing Chemicals growth performance against total manufacturing (2008-2012) 47% 33% 19% 19% 22% 21% 2008-8% 2009-12% 4% 2010 2011 2012 10% Chemicals Manufacturing Note: Growth performance is calculated based on the value of output, Manufacturing data for 2011 and 2012 is preliminary Source: UNIDO and GPCA Estimations, 2013 Following the decline in production output during 2009 economic downturn, both GCC chemicals and manufacturing sectors are on recovery trend since 2010. During 2010 and 2011, chemicals sector s output measured in value terms outperformed that of the manufacturing sector as a whole. In 2010, output of GCC chemicals industry grew by 33% while the total output of GCC manufacturing sector grew by 22%. Likewise, the chemicals sector s output was more than double that of the manufacturing sector in 2011 growing by 47% in comparison to 21% growth rate achieved by the manufacturing sector. In 2012, however, the growth trend of the chemicals sectors in the region was lower than the growth trend for the total manufacturing sector: chemicals sector grew by 4% and manufacturing total by 10%. Lower growth rate of chemicals sector in 2012 is a result of lower year-onyear rate of chemicals production expansion in 2012. During 2010 and 2011, GCC chemicals industry s production capacity has expanded by 14.5% and 10% year-on-year respectively, higher than 6.1% growth in 2012. Gulf Petrochemicals & Chemicals Association 57 GCPA_2012_Facts_Figures_1111.indd 57 12.11.13 18:35

9. 7. International GCC Chemicals Trade Industry (2012) Growth Pattern (2012) GCC chemicals production growth by product segment in global perspectives World and GCC Production Growth by Product Segment, CAGR (2008-2012) 14.3 10.4 11.1 3.0 4.9 6.6 5.4 2.3 2.2 3.1 Chemicals (Excl Pharmaceuticals) Agricultural Chemicals Inorganic Chemicals Organic Chemicals Plastic Resins World GCC Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013 The worldwide average growth rate for chemicals production (excluding pharmaceuticals) between 2008 and 2012 stood at 3%. GCC production growth in the same period is 10.4% which is just over triple the capacity additions in the region. Looking at individual business segments, GCC production growth has outpaced the global growth within the same time span. In the plastic resins segment, GCC production grew at CAGR of 14.3% while its global counterpart grew by 3.1%. Similarly the GCC petrochemicals segment s production grew by 11.1% in comparison to 2.2% for the global petrochemical industry segment. Likewise, inorganic chemicals production growth in the GCC between 2008 and 2012 was higher than of that worldwide. During this period, this product segment grew by an average 5.4% in the GCC while globally it grew by an average 2.3%. Agro chemicals production in the GCC is mostly concentrated around fertilizers production. Between 2008 and 2012, fertilizers production in the GCC grew slightly higher than worldwide production of agricultural chemicals: GCC grew at CAGR of 6.6% and worldwide production at CAGR of 4.9%. GCC chemicals production growth between 2008 and 2012 was 10.4% p.a, while globally 3%. 58 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 58 12.11.13 18:35

7. GCC Chemicals Industry Growth Pattern (2012) Global and GCC production index Global Production Index by Product Segment (Index 2007=100) 2007 2008 2009 2010 2011 2012 Chemicals (excluding Pharmaceuticals) 100.0 100.5 93.6 105.2 109.6 112.9 Agricultural Chemicals 100.0 101.8 101 111.1 115.7 123.5 Consumer Chemicals 100.0 99.5 95.2 100.5 106.3 109.8 Inorganic Chemicals 100.0 100.8 90.9 102.2 107 110.3 Organic Chemicals 100.0 100.7 91.3 105.2 109.2 109.9 Plastic Resins 100.0 99.6 92.6 106.6 109.3 112.6 Synthetic Rubber 100.0 100.9 90.1 108 119.4 127.1 Man-Made Fibers 100.0 102.8 101.8 115.7 125 134.4 Specialty Chemicals 100.0 100.5 94.8 103.9 107.9 111.8 Source: American Chemistry Council, 2013 GCC Production Index by Product Segment (Index 2007=100) 2007 2008 2009 2010 2011 2012 Chemicals (excluding Pharmaceuticals) 100.0 107.6 122.5 143.0 152.6 159.7 Inorganic chemicals 100.0 102.5 106.2 109.6 126.1 126.6 Plastic Resins 100.0 105.2 129.6 154.5 163.1 179.5 Fertilizers 100.0 100.2 103.1 107.3 117.0 129.2 Organic Chemicals 100.0 112.3 131.1 159.5 168.7 171.1 Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013 Gulf Petrochemicals & Chemicals Association 59 GCPA_2012_Facts_Figures_1111.indd 59 12.11.13 18:35

9. 7. International GCC Chemicals Trade Industry (2012) Growth Pattern (2012) GCC chemicals production growth in a global perspective Global Chemicals Production Growth by Region CAGR (2008-2012) 10.4% 8.6% 3.7% 3.0% 3.0% 0.9% 0.0% -1.1% -1.9% GCC Asia Africa and Middle East Global Output of Chemicals Global Latin America Output of Chemicals (exl Pharma) Western Europe Central and Eastern Europe North America Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013 Total global output of chemicals includes production growth of inorganic and organic chemicals, plastic and consumer chemicals as well as pharmaceuticals. Current GCC chemicals production data does not include pharmaceuticals and therefore is comparable with global output excluding pharmaceuticals. Current global data includes data from 65 nations which account for 97% of the global business of chemistry. The average growth rate of global chemicals output between 2008 and 2012 is estimated at 3%. From 2008 to 2012 chemicals production growth in the GCC grew at an average rate of 10.4% which is highest among other regions. Asia follows the GCC closely with an average production growth of 8.6%. Global Chemicals Production Index by region (2007=100) 2007 2008 2009 2010 2011 2012 Global Output Chemicals (Excluding Pharmaceuticals) 100 100.5 93.6 105.2 109.6 112.9 North America 100 94.5 84.5 87.3 87.4 87.4 Latin America 100 102.5 97.1 103.9 104.7 106.3 Western Europe 100 99.8 92.5 99.4 101.1 99.9 Central and Eastern Europe 100 100.1 83.8 95.2 99.3 95.9 Asia 100 106.3 108.6 125.4 137.3 147.7 GCC 100 107.6 122.5 143 152.6 159.7 Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013 60 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 60 12.11.13 18:35

6. GCC Capacity Utilization (2011-2012) 8. Gulf Petrochemicals & Chemicals Association 61 GCPA_2012_Facts_Figures_1111.indd 61 12.11.13 18:35

9. International Trade (2012) Overview of global chemicals output Global Chemicals (Excluding Pharmaceutical) Shipments ($USbillion) CAGR (2005-2012) 9.7% 3'902.5 3'881.9 97.5% Other regions 2'033.7 2'252.4 2'623.3 3'003.1 2'634.3 3'196.7 2.5% GCC 2005 2006 2007 2008 2009 2010 2011 2012 Note: Shipments is equivalent to value of output Source: American Chemistry Council and GPCA, 2013 Currently almost every nation is engaged in either in production, trade or consumption of chemicals. The term shipments is equivalent to the term value of output. As reported by American Chemistry Council, global shipments of chemicals excluding pharmaceuticals reached $US 3,881.9 billion growing by an average 9.7% since 2005. The value of chemicals output in the GCC is estimated at $US97.3 billion which represents 2.5% of the world s total. Between 2005 and 2012, chemicals industry output in the GCC grew at an average 19% per annum which is higher than global growth. Value of chemicals output in the GCC in 2012 is estimated at $US97.3 billion which represents 2.5% of the total global. The following table presents global chemicals shipments (including pharmaceuticals) or value of output by region. In 2012, global output of chemicals (including pharmaceuticals) reached $US 4,973.2 billion. Asian countries produced about half or 49.2% of all the chemicals in 2012. Among Asian countries, China is the largest producer representing 28.8% of global chemicals output. Other regions with Western Europe and North America which account for 20.5% and 17.6% respectively. In 2012, GCC represented 2 % of global chemicals output (including pharmaceuticals). Looking at the pace of growth of the chemicals output between 2005 and 2012, GCC regions saw the highest average growth rate of 19% per annum. Asia is the second fastest growing region with CAGR (2005-2012) of 16.5%. GCC and Asia were the only regions which saw a double digit growth over the past years. Other regions with noticeable growth of chemicals output including pharmaceuticals are Latin America and Eastern & Central Europe which grew by an average 9% per annum during the same period. 62 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 62 12.11.13 18:35

Overview of global chemicals output Global Chemical Shipments by Country/Region ($US billion) 2005 2006 2007 2008 2009 2010 2011 2012 China 289.4 364.1 494.2 667 746.5 978.7 1,303.3 1,431.9 553.4 599.4 671.6 755.80 691.3 854.3 1,009.9 1,015.8 Western Europe 767.1 829.4 954.3 1,045.5 874.6 947.5 1,081.5 1,017.9 North America 699.3 753.2 815.8 846.20 707.2 792.5 891.70 876.20 Latin America 160.8 178.3 207.3 229.00 214.4 248.5 295.30 293.90 Central & Eastern Europe 83.6 97.3 115.1 143.0 102.0 130.4 155.3 153.7 GCC 28.9 33.4 43.4 52.2 48.2 64.4 94.1 97.3 Africa and Middle East (Excl GCC) 66.5 67.5 71.8 90.4 78.4 91.1 89.8 86.5 Total Global Shipments 2,648.9 2,922.6 3,373.5 3,829.1 3,462.6 4,107.5 4,920.9 4,973.2 Note: Shipments is equivalent to value of output Source: American Chemistry Council and GPCA, 2013 Global chemicals output (including pharmaceuticals) reached $US 4.9 trillion in 2012. Gulf Petrochemicals & Chemicals Association 63 GCPA_2012_Facts_Figures_1111.indd 63 12.11.13 18:35

9. International Trade (2012) Global chemicals export by region and country Global Chemicals (Excluding Pharmaceutical) Exports by Region GCC 1.5% Central & Eastern Europe 3.5% 2.9% Latin America 0.8% Middle East (Excl GCC) 1.1% Africa GCC 3.6% Central & Eastern Europe 5.8% 3.4% Latin America 1.5% Middle East (Excl GCC) 1.4% Africa North America 15.6% 2002 $US 505 billion 53.8% Western Europe 42.1% Western Europe North America 13.3% 2012 $US 1,458 billion Asia 20.8% Asia 28.9% Source: World Trade Organization, 2013, Note: Includes intra-regional trade World Top 10 Exporters of Chemicals (Excluding Pharmaceuticals) in 2012, US$ billion Export value in 2012, 2012 Share US$ billion USA 162.4 11% Germany 147.3 10% China 119.5 8% Belgium 84.4 6% Netherlands 78.8 5% Japan 74.9 5% France 70.9 5% South Korea 59.8 4% United Kingdom 46.6 3% Singapore 44.9 3% Top 10 889.4 61% World 1,458.3 Source: World Trade Organization, 2013 64 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 64 12.11.13 18:35

World Chemicals (Excluding Pharmaceuticals) Exports by Region, US$ billion 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 North America 78.9 87.2 104.7 116.6 131.1 149.4 172.5 136.8 171.8 198.0 194.0 Latin America 14.5 16.0 20.3 24.8 29.5 33.8 41.2 31.7 39.0 47.8 49.6 Western Europe 271.8 325.8 389.4 426.3 473.9 560.6 607.3 497.9 555.9 647.2 614.3 Central and Eastern 17.8 22.7 29.9 36.8 44.1 56.2 76.6 51.9 64.0 80.8 84.4 Europe GCC 7.5 8.0 12.0 15.0 17.7 22.5 25.3 22.3 33.3 47.2 52.7 Middle East (Excl GCC) 4.2 4.9 6.8 8.2 9.4 12.3 19.0 14.4 19.1 23.4 22.1 Africa 5.4 6.4 7.9 9.4 10.1 11.5 21.2 13.9 17.9 21.0 20.4 Asia 105.4 131.2 169.1 200.1 228.9 272.3 307.4 257.2 346.6 427.2 420.7 World Total 505.5 602.3 740.3 837.2 944.7 1,118.5 1,270.6 1,026.1 1,247.5 1,492.6 1,458.3 Source: World Trade Organization, 2013 Gulf Petrochemicals & Chemicals Association 65 GCPA_2012_Facts_Figures_1111.indd 65 12.11.13 18:35

9. International Trade (2012) Global chemicals import by region and country World Chemicals (Excl Pharmaceuticals) Imports by Region Africa Central & Eastern Europe 4.7% Latin America 7.5% 1.1% GCC 2.2% 1.2% Middle East (Excl GCC) Africa Central & Eastern Europe 7.0% Latin America 9.0% 3.0% 1.4% GCC 1.0% Middle East (Excl GCC) North America 16.1% 2002 $US 529.7 billion 42.4% Western Europe North America 11.0% 2012 $US 1,508 billion 36.0% Western Europe Asia 24.7% Asia 32.0% Source: World Trade Organization, 2013, Note: Includes intra-regional trade World Top 10 Importers of Chemicals (Excluding Pharmaceuticals) in 2012, US$ billion 2012 Import Value, US$ billion 2012 Share China 186.1 12.3% USA 131.0 8.7% Germany 105.8 7.0% France 65.2 4.3% Belgium 63.9 4.2% United Kingdom 51.2 3.4% Netherlands 50.5 3.4% Japan 49.2 3.3% Italy 48.0 3.2% South Korea 42.4 2.8% Top 10 793.5 52.6% World 1,508.3 Source: World Trade Organization, 2013 66 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 66 12.11.13 18:35

World Chemicals (Excluding Pharmaceuticals) Imports by Region, US$ billion 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 North America 80.7 90.6 102.1 116.7 126.9 133.9 151.3 118.3 140.7 164.9 165.0 Central & Latin 37.9 41.8 51.6 58.9 67.1 80.5 104.2 78.2 97.2 122.3 125.8 America Western Europe 226.7 275.3 330.9 372.1 415.5 499.3 541.7 424.5 486.7 577.1 543.7 Central and Eastern 23.8 30.4 38.6 46.2 57.1 74.6 91.7 67.4 83.9 104.1 105.3 Europe GCC 5.7 6.4 7.6 9.4 11.2 14.0 14.7 14.3 22.2 23.9 20.1 Middle East (Excl GCC) 5.9 7.0 8.9 9.8 11.2 13.7 16.2 14.1 16.6 18.8 17.9 Africa 11.3 12.8 15.9 17.8 20.6 26.2 32.5 29.3 33.9 42.7 43.8 Asia 137.8 163.5 209.6 242.3 269.4 316.1 373.0 311.7 414.6 498.6 486.6 World Total 529.7 627.9 765.1 873.2 979.1 1,158.2 1,325.2 1,057.7 1,295.9 1,552.3 1,508.3 Source: World Trade Organization, 2013, Note: Includes intra-regional trade Gulf Petrochemicals & Chemicals Association 67 GCPA_2012_Facts_Figures_1111.indd 67 12.11.13 18:35

9. International Trade (2012) Global chemicals consumption by region and country Global Domestic Chemicals Sales (2005-2012) $US Billion CAGR (2005-2012) 9.4% 4'920.9 4'973.2 Central & Western Europe 2.7% Latin America 4.8% 2.2% Africa % Middle East (Excl GCC) 1.3% GCC 2'648.9 2'922.6 3'373.5 3'829.1 3'462.6 4'107.5 North America 16.8% 2012 $US 4,973.2 billion 28.2% China Western Europe22.9% 21.1% Asia Pacific (Excl China) 2005 2006 2007 2008 2009 2010 2011 2012 Note: Source: American Chemistry Council and GPCA, 2013 The worldwide chemicals consumption (or domestic sales) in 2012 is estimated at $US4.9 trillion. This is $US2.6 trillion. Asian countries account for the majority of the world s chemicals consumption accounting in 2012 for 49.3% of world s total. Among all Asian countries, consumption in China was the highest. With $US1.4 trillion worth of chemicals consumption in 2012, China accounted for 28.2% of worlds total consumption in the same year. The consumption of chemicals in GCC countries in 2012 is estimated at $US64.7 billion which accounts for 1.3% of world s total consumption. This is lower than the GCC s 2.5% share of the world s total chemicals industry s output in the same year and is due to the region s export orientation. Domestic Sales of Chemicals (2005-2012), $US billion Region 2005 2006 2007 2008 2009 2010 2011 2012 China 325.3 328.3 460.8 646.8 722.6 943.0 1,272.8 1,403.5 487.7 610.8 686.7 750.8 703.0 885.6 1,044.6 1,050.3 Western Europe 865.1 933.3 1,077.6 1,191.6 973.1 1,047.4 1,196.0 1,137.9 North America 669.5 722.4 791.8 815.5 680.3 764.5 851.8 836.9 Latin America 142.8 156.8 173.4 182.4 182.9 210.7 247.5 238.8 Central & Western Europe 70.0 77.3 84.7 109.5 82.8 110.0 134.6 133.2 Africa & Middle East (exlc GCC) 66.2 66.8 63.7 90.9 76.7 92.6 101.8 107.7 GCC 22.3 26.9 34.8 41.6 41.1 53.3 71.9 64.7 Total Domestic Sales 2,648.9 2,922.6 3,373.5 3,829.1 3,462.6 4,107.5 4,920.9 4,973.2 Source: American Chemistry Council and GPCA, 2013 Note: 68 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 68 12.11.13 18:35

9. International Trade (2012) Gulf Petrochemicals & Chemicals Association 69 GCPA_2012_Facts_Figures_1111.indd 69 12.11.13 18:35

9. International Trade (2012) Introduction Globalization of the chemicals industry date back to the 1960s. Now almost every nation is involved in the foreign trade of chemical products either as supplier or consumer. Advancements in infrastructure such as transport and telecommunications as well as the elimination of trade barriers such as tariffs and duties, promote and support trade between nations. Competition between companies is extended beyond the national borders resulting in several companies from different nations competing for the same customers. Commodity chemicals can be produced in one location and downstream products manufactured in several other locations. These products are then shipped to many other locations to be processed including plastic goods, automobile parts, paints and textiles. Typically, industrialized nations produce wide range of chemical products: from commodity chemicals to specialty chemicals. Developing nations generally produce basic chemical products. GCC countries participate in international trade in all segments of the chemicals industry. GPCA members represent approximately 97% of all the chemicals exports from the region. 70 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 70 12.11.13 18:35

9. International Trade (2012) GCC chemicals export by product segment GCC Chemicals Export (2008-2012) 38.7 43.6 CAGR (2008-2012) 11.9% 51.6 55.1 60.7 2008 2009 2010 2011 2012 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 GCC chemicals exports have grown rapidly over the past decade driven primarily by capacity expansions. The volume of chemicals exports in 2012 reached 60.7 million tons which is double its level a decade ago. Over the 2008-2012 period, GCC chemicals export grew by an average 11.9% per annum. The majority of chemicals exported by the GCC are petrochemicals (comprised of basic petrochemicals, intermediates, 66.7% of the total chemicals export in 2012. Since 2008 volume of petrochemicals exports grew at a CAGR of 13.4% reaching 40.5 million tons in 2012. Polymers are the largest petrochemical product group exported from the GCC and accounted for 27.9% of the GCC export volume in 2012. The majority of polymers exported by the GCC producers are commodity thermoplastics. GCC polymers export grew by an average 16.9% between 2008 and 2012 which is higher than the overall export growth recorded by the GCC chemicals industry. Part of the chemicals industry expansion and the consequent export of the products. GCC Fertilizers export represented 24.1% of the total chemicals exports in 2012. Over the past decade GCC fertilizers exports have almost tripled in terms of volume, reaching 14.6 million tons in 2012. Along fertilizers, GCC exports inorganic chemicals which reached 3.8 million tons in 2012 accounting for 6.2% of the total GCC chemicals export. Specialty chemicals and consumer chemicals, although high value products, represent a minor share in GCC chemicals exports accounting for 1.6% and 1.3% accordingly. GCC chemicals export grew by 11.9% p.a between 2008 and 2012. petrochemical group exported from the GCC. In 2012 which accounted for 17.4% of the total chemicals export. Exports of basic petrochemicals in 2012 reached 9.9 million tons which represents 16.4% of total export. Gulf Petrochemicals & Chemicals Association 71 GCPA_2012_Facts_Figures_1111.indd 71 12.11.13 18:35

9. International Trade (2012) GCC chemicals export by product segment GCC Chemicals Export by Product Segment, 2012 Total: US$ 52.7 bn Polymers 43.1% Petrochemicals 78.3% Other petrochemicals 35.2% 9.5% Fertilizers 0.2% Industrial Gases 3.5% Inorganic chemicals 6.7% Specialty chemicals Basic Inorganics 13.2% 1.8% Consumer chemicals Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 The value of GCC chemicals exports in 2012 reached $US52.7 billion. The majority of exports are chemicals and polymers). GCC polymers exports in 2012 are valued $US22.7 billion which accounts for 43.1% of the total exports by value. As highlighted previously, the majority of GCC polymers exports are commodity thermoplastics. Following rapid polymers capacity expansion in the GCC, polymers exports saw the highest growth rate among other product segments. Exports of plastics in primary forms grew at an average rate of 25% between 2002 and 2012. With $US18.5bn worth of exports in 2012, other represented 35.2% of total chemicals export. Since 2002, GCC export of petrochemicals measured in value terms grew at an average rate of 20.3%. Within the basic inorganics segment, the majority of GCC export is comprised of fertilizers. Due to commodity nature of fertilizers, their share in exports measured in volume. In 2012, fertilizers accounted for 9.5% share of the total value of GCC chemicals exports. Historical growth of fertilizers exports of CAGR (2002-2012) 23% is one of the highest among other products. Specialty chemicals and consumer chemicals are high value-added products. GCC countries has exported $US 3.5 billion worth of specialty chemicals in 2012 which accounts for 6.7% of total exports. While they presently represent only a small share, export growth of CAGR 26.4% per annum between 2002 and 2012 demonstrates the increasing focus of the GCC countries on production and export of specialty chemicals. Export of consumer chemicals represent 1.8% share in the GCC chemicals export in terms of value. The value of GCC chemicals exports in 2012 reached $US52.7 billion. 72 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 72 12.11.13 18:35

9. International Trade (2012) GCC chemicals import by product segment GCC Chemicals Import by Product Segment, 2012 Total: 13.6 millions tons Petrochemicals 40.1% Other petrochemicals 22.8% Polymers 17.3% 2.2% Fertilizers 1.7% Industrial Gases 36.1% Inorganic chemicals Basic Inorganics 40.0% Consumer chemicals 4.4% 15.5% Specialty chemicals Note: 2012 data for some countries is preliminary Source: United Nations, 2013 Chemicals producing countries are both exporters and importers of chemicals. In 2012 GCC countries imported 13.6 million tons of chemicals. This import number has grown at an average of 9.6% per annum over the past decade. GCC countries import chemicals from both neighboring countries (Intra-GCC Import) and overseas (Extra-GCC Import). In 2012, the majority of chemicals import was comprised of basic inorganics which accounted for 40% of the total import volume. Notably, GCC imported 4.9 million tons of inorganic chemicals which are derivatives of various minerals and generally do not contain carbon as principle element. This volume accounted for 36.1% of 2012 chemicals import to the GCC. Historically, inorganic chemicals import to the GCC has been high accounting for up to one third of the overall import volume. Another segment of basic inorganics fertilizers represented only a small share of 2.2%. GCC polymers import reached 2.3 million tons in 2012. Most of this volume is represented by commodity thermoplastics. In 2012, import of polymer products accounted for 17.3% share in total chemicals import volume. Commodity thermoplastics are primarily used in packaging, building and construction and they are imported mostly from other GCC countries, Asia and Europe. GCC specialty chemicals import in 2012 was approximately 2 million tons which represented 15.5% of the total chemicals import. The majority imported is industrial additives and paints & inks which account for 24% and 21% of specialty chemicals import volume respectively. Others imports include lubricant additives, paint additives, dyes and pigments, adhesives, catalysts, crop protection chemicals and coatings. Import of consumer chemicals reached 0.6 million tons in 2012 which represents 4.4% of total volume of chemicals import. Historically, consumer chemicals imports have represented a minor share in the total import numbers. GCC countries imported 13.6 MT of chemicals in 2012. Gulf Petrochemicals & Chemicals Association 73 GCPA_2012_Facts_Figures_1111.indd 73 12.11.13 18:35

9. International Trade (2012) GCC chemicals import by product segment GCC Chemicals Import by Product Segment, 2012 Total: $US 20.1bn Petrochemicals 46.1% Other petrochemicals 23.1% Polymers 23.0% 0.9% Fertilizers 1.5% Industrial Gases 11.9% Inorganic chemicals Basic Inorganics 14.3% Consumer chemicals 7.5% 32.1% Specialty chemicals Note: 2012 data for some countries is preliminary Source: United Nations, 2013 The value of GCC chemicals import in 2012 is estimated at $US20.1 billion, the majority of which is specialty chemicals. In 2012 GCC countries have imported $US6.5 billion worth of specialty chemicals which represents 32.1% of the total chemicals import. The majority of specialty chemicals imported include: paints and inks, industrial additives, catalysts, lubricant additives, dyes and pigments, crop protection chemicals, adhesives, rubber processing chemicals, paint additives, contraction chemicals, coatings and other miscellaneous chemicals. Between 2008 and 2012, import of specialty chemicals to the GCC measured in value grew at an average rate of 17.7% per annum. Polymer imports to the GCC stood at US$4.6 billion in 2012 which accounts for 23% of the GCC chemicals import. The majority of polymers imported are plastic resins import of which grew at an average rate of 10.2% between 2008 and 2012. Value of imported petrochemicals (basic, intermediate in 2012. Historic increase of volume of petrochemicals import has resulted in the high growth of import measured in value terms which grew by 23.2% per annum over the 2008-2012 period. GCC import of inorganic chemicals has reached $US2.4 billion in 2012. This is the largest product segment within basic inorganics and has not changed The import of consumer chemicals in 2012 in value terms is $US1.5 billion which accounts for 7.5% of chemicals import to the GCC. 74 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 74 12.11.13 18:35

9. International Trade (2012) GCC chemicals export by country GCC Chemicals Export by Origin Million Tons 70 60 50 40 30 20 10 24.4 2.3 2.8 1.2 0.9 0.1 29.8 2.6 5.6 1.1 1.1 0.1 CAGR (2002-2012) 9.6% 31.5 2.7 2.0 7.0 17.0 19.3 16.8 1.2 1.7 38.7 2.3 3.5 7.2 22.6 1.3 1.8 51.6 2.0 3.5 5.7 7.4 31.7 1.2 60.7 3.2 3.6 6.9 10.0 35.8 1.2 0 2002 2004 2006 2008 2010 2012 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 In 2012, Saudi Arabia was the largest chemicals exporter in the region, accounting for 59% of the total regional export volume. While Saudi Arabia continues to be the leading regional exporter of chemicals, its from 70% in 2002 to 58% in 2012. This decline has been mostly attributed to the export growth from other GCC countries. Saudi Arabia s chemicals exports over the past decade were largely polymers exports, particularly plastics in primary forms, as well as fertilizers and petrochemicals. Qatar is the second largest exporter of chemicals in the GCC representing 17% of the region s chemicals exports. With capacity expansions taking place over the past decade, Qatar s chemicals exports have grown at an average rate of 13.7% per annum since 2002. As a result, Qatar s share in the chemicals export volume has increased from 12% in 2002 to 17% in 2012. Fertilizers and petrochemicals account for the majority of Qatar s chemicals exports. With 6.8 million tons of exports, Oman is the third largest exporter in the GCC. Over the past decade chemicals exports from Oman have experienced tremendous growth: from one of the minor exporters to one of the top three GCC exporters representing 11% of GCC chemicals exports in terms of volume. Similar to Qatar, fertilizers are Oman s major chemical export. Kuwait s share in the GCC chemicals export has been around 6% over the past years. The majority of Kuwait s exports are fertilizers and polymers. Kuwait s export growth has been modest in comparison with other GCC countries between 2002 and 2012 chemicals exports grew at CAGR 4.5%. The United Arab Emirates exported about 3 million tons of chemicals in 2012 which represents 5% of the GCC overall exports. UAE exports have registered a steady growth over the past decade of CAGR 13% and this increase is driven by the growth of its polymers and fertilizers segments. Currently these products account for the majority of UAE s chemical exports. Bahrain is a minor GCC exporter representing 2% in the GCC chemicals exports. Exports from Bahrain are almost unchanged over the past decade and therefore its share has shrunk from 5% a decade ago to current 2%. Exports from Bahrain are concentrated around fertilizers exports which represent the majority of their international trade of chemicals. Saudi Arabia is the largest chemicals exporter in the GCC. Gulf Petrochemicals & Chemicals Association 75 GCPA_2012_Facts_Figures_1111.indd 75 12.11.13 18:35

9. International Trade (2012) GCC chemicals import by country GCC Chemicals Import by Country, 2002-2012 Million Tons 16 14 12 10 8 6 4 2 5.4 1.1 0.3 1.8 0.2 0.3 6.3 0.8 0.4 2.4 0.3 0.2 CAGR (2002-2012) 9.6% 9.6 9.5 0.5 0.7 1.0 0.6 1.7 0.4 0.7 0.6 4.3 4.3 12.8 13.6 0.8 1.0 1.3 1.8 1.1 0.5 2.0 4.9 3.9 0.5 0 2002 2004 2006 2008 2010 2012 Note: 2012 data for some countries is preliminary Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 Over the past decade, GCC chemicals imports have grown at an average rate of 9.6% per annum reaching 13.6 million tons in 2012. Saudi Arabia is the largest chemicals importer in the GCC representing approximately 33% of the total volume of chemicals imports. The majority of chemicals imports to Saudi Arabia are inorganic chemicals which represent about one third of the chemicals import volume. Petrochemicals also represent a considerable share in Saudi Arabia s chemicals import. In 2012, about 1.2 million tons of petrochemicals were imported by the country which accounts for 26% of its total chemicals import. While Saudi Arabia is the largest polymers producer in the region, there were approximately 0.7 million tons of commodity thermoplastics imported in 2012. Import of specialty chemicals reached 0.8 million tons in 2012 which represents about 18% of the country s import volume. United Arab Emirates is the second largest chemicals importer in the region with 29% of the region s import volume. The majority of chemicals imported to UAE are plastic resins. In 2012 the country imported approximately 1 million tons of commodity thermoplastics. Petrochemicals is the second largest segment in the UAE s chemicals import with 0.8 million tons imported in 2012, followed by specialty chemicals. Oman imported 1.9 million tons of chemicals in 2012, almost half of which are petrochemical products. Inorganic chemicals accounted for 28% of the country s chemicals imports, followed by plastic resins which accounted for 11%. Oman s chemical imports has grown by an average 20% per annum over the past 10 years is highest among other GCC states. Qatar imported 1.8 million tons of chemicals in 2012, the majority of which are inorganic chemicals and specialties, particularly industrial additives and paints & inks. The chemicals import growth rate in Qatar is one of the highest in the region over the past decade it has grown at an average 19.8% per annum. Rest of the GCC countries: Bahrain and Kuwait imported less than 1 million tons of chemical products in 2012. The majority of chemicals imported by Bahrain are inorganic chemicals which account for about 75% of chemicals import volume. Kuwait imports mostly inorganic chemicals (32%), plastic resins (30%) and specialty chemicals (22%). 76 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 76 12.11.13 18:35

9. International Trade (2012) GCC chemicals export by destination GCC Chemicals Export by Destination (2002-2012) Rest of the World 14.5% South America 0.3% Rest of the World 24.2% 47.1% Asia (Excl China) 34.2% Asia (Excl China) North America 11.2% GCC 4.4% 2002 24.4 million tons South America 1.6% North America 5.6% 2012 60.7 million tons Europe 11.3% China 11.1% GCC 6.2% Europe 12.9% 15.3% China Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 Traditionally, Asia has been the largest export market for GCC chemicals producers accounting for half of the GCC exports by volume. In 2012, GCC countries exported 30 million tons of chemicals to Asia with China being the main destination. Development of the manufacturing sector in China has boosted its demand for raw materials including chemicals, as a result GCC chemicals exports to China grew at an average rate of 13% over the past 10 years. Exports to other Asian countries grew as well but at slower pace of CAGR 6% between 2002 and 2012. Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for the GCC chemicals industry. Europe accounted for 12.9% of GCC total exports in 2012 or 7.8 million tons. Regionalization of chemicals trade in the GCC is on the rise. Over the past decade exports within GCC region grew at an average rate of 13% per annum. The share of GCC intra-regional trade of chemical products (by volume) increased from 4.2% in 2002 to 6.2% in 2012. North and South America account for 7.2% of the GCC exports. Although, North America continues to be the largest trading partner, exports to South and Central America have been steadily increasing reaching 1.6% share in the GCC chemicals exports in 2012. Africa has not been included as a separate area of destination; however it represents about 75% of the exports currently accounted for under Rest of the world. Asia is the largest export market for the GCC chemicals producers. Gulf Petrochemicals & Chemicals Association 77 GCPA_2012_Facts_Figures_1111.indd 77 12.11.13 18:35

9. International Trade (2012) GCC chemicals export by destination GCC Chemicals Export by Destination (2002-2012) Rest of the Word 15.2% 38.3% Other Asia (Excl China) Rest of the Word 14.7% 38.3% Other Asia (Excl China) South America 0.1% North America 7.9% GCC 10.0% 2002 $US 7 billion South America 1.9% North America 3.8% GCC 9.1% 2012 $US 52.7 billion Europe 14.7% 13.8% China Europe 15.9% 16.3% China Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013 The value of GCC chemicals exports in 2012 reached $US52.7 billion, the majority of which is exported to Asia. Between 2002 and 2012 GCC chemicals exports in value terms grew at average rate of 22% per annum. Asia traditionally has been the largest export market for GCC chemicals producers accounting for half of the GCC export. In 2012, value of GCC chemicals export to Asia is estimated at $US 28.8 billion which accounts for 54.6% of GCC chemicals export. As Asia continues to build its infrastructure and increase production this trend is likely to continue. China is the major Asian destination for GCC chemicals export. In 2012 GCC exported $US20.2 billion worth of chemical products to China which is 70% of all exports to Asia. Over the past decade, GCC chemicals export to China has grown at CAGR of 22.3%. As a result of this growth, the total GCC chemicals export to China, measured in value terms, increased from 13.8% in 2002 to 16.3% in 2012. Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for GCC chemicals industry. GCC chemicals export to Europe is estimated at $US8.4 billion which accounts for 15.9% of the total value of GCC exports in 2012. With average growth of 23.2% per annum over the past decade, GCC export growth to Europe measured in terms of value is double that measured in terms of volume. a double-digit growth of 21.2% per annum, similar to the overall export growth rate. As a result the share of intra-gcc export measured in value terms averaged 9%-10% over the past decade. The value of chemicals exported to North and Latin America reached $US3 billion in 2012. This represents a 5.7% share in the total export value of GCC chemicals in the same year. While North America continues to be the largest trading partner in the Americas, export to South America grew at a higher pace. As a result, the share of Latin America has increased from 0.1% in 2002 to 1.9% in 2012. Africa hasn t been included as a separate area of destination; however it represents approximately 60% of the export value currently accounted for under Rest of the world. Export to African countries grew at an average rate of 20.3% per annum and reached $US4.3 billion in 2012. This represents 8.2% of the total GCC chemicals export measured in value terms. Value of GCC chemicals exports grew by 22% p.a over the past decade. Intra-GCC chemicals export accounted for 9.1% of the total value of regional export or $US4.8 billion. Intra-GCC export over the past decade has grown by 78 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 78 12.11.13 18:35

9. International Trade (2012) GCC chemicals import by origin GCC Chemicals Import, Million tons CAGR (2002-2012) 9.6% Middle East (Excl GCC) 5.0% North America 6.0% 3.0% Africa 30.0% Other Asia (Excl China) 5.4 2002 12.8 13.6 9.6 9.5 6.3 2004 2006 2008 2010 2012 Europe 18.0% 2012 13.6 million tons China 9% 9.0% China GCC 29.0% Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 GCC chemicals imports have grown at an average rate of 9.6% over the past decade reaching 13.6 million tons in 2012. The majority of chemicals imported by the GCC states originate from Asian countries which account for 38% of import volume or 5 million tons. China and Australia are the biggest Asian partners of GCC in chemicals import. The majority of Australian import is comprised of inorganic chemicals, while import from China is represented by the mix of inorganic chemicals, petrochemicals and plastic resins. Intra-GCC import accounts for 28% of total chemicals imported in 2012. Petrochemicals and polymers represent the majority of intra-gcc trade. Europe is the third largest trading partner for GCC in terms of chemicals import. In 2012, GCC imported 2.4 million tons from Europe (comprised of Western, Central and Eastern Europe). Majority of chemicals imported from Europe are inorganic chemicals, petrochemicals and plastic resins. They represent 59% of chemicals import volume from Europe. Import from the Middle East (Excluding GCC) is estimated at 0.65 million tons which accounts for 5% of all GCC imports. GCC import from the Middle East is mostly comprised of inorganic chemicals which represent close to 80% of total volume of chemicals imported from this region. The main trading partner of the GCC in the Middle East is Jordan; about 70% of chemicals imported from Middle Eastern countries is from Jordan. Gulf Petrochemicals & Chemicals Association 79 GCPA_2012_Facts_Figures_1111.indd 79 12.11.13 18:35

9. International Trade (2012) GCC chemicals trade balance by product segment GCC Chemicals Trade Balance by Product Segment Trade Balance (Million Tons) 60 50 40 30 20 10 0 5.4 3.7 10.3 6.9 4.6 13.0 9.0 4.2 9.5 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 GCC Chemicals Trade Balance by Product Segment (millions tons) 20.4 18.9 23.5 21.9 29.2 9.4 7.3 13.8 38.8 9.8 11.6 48.6 14.6 14.5 19.4 20.4 2002 2004 2006 2008 2010 2012 GCC is an important player in the global chemicals market. GCC chemicals industry registered a growth of 13.5% per annum between 2008 and 2012. Trade balance growth over this period is mostly driven by surplus in export volume of basic inorganics (which includes fertilizers) and polymers. In 2012, highest trade balance was registered among petrochemicals. Polymers trade balance reached 14.5 million tons in 2012, almost double of that in 2008. Petrochemicals (excluding polymers) registered trade balance of 20.4 million tons, up from 13.8 million tons in 2008. This is a growth of 10.3% per annum. Within basic inorganics segment, trade balance growth between 2008 and 2012 reached 11.5% per annum. In 2012, there was 14.6 million tons trade balance of basic inorganics in the GCC. 13.8 14.5 14.6 7.3 9.4-0.8-1.0-0.4 0.0 Petrochemicals (Excl polymers) Polymers Basic Inorganics Specialty Chemicals Consumer Chemicals 2008 2012 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 80 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 80 12.11.13 18:35

9. International Trade (2012) GCC chemicals trade balance by country GCC Chemicals Trade Balance by country Trade Balance (Million Tons) 60 50 40 30 20 10 0 18.9 2.1 2.5 15.2 16.9-0.2-0.2 23.5 21.9 2.4 2.3 5.4 1.6 6.5 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 GCC Chemicals Trade Balance by Country (millions tons) 31.3 13.7 29.2 1.6 3.0 6.5 20.9 38.8 2.7 5.2 6.3 27.3 48.6 2002 2004 2006 2008 2010 2012 3.1 4.9 9.4 31.3 GCC trade balance growth over the period between 2002 and 2012 is mostly driven by surplus in export volume from Saudi Arabia. In 2012, Saudi Arabia s trade balance reached 31.3 million tons, up from 20.9 million tons in 2008. This is the growth of 10.3% per annum. Second largest producer in the region Qatar registered a trade balance of 9.4 million tons. Since 2008 chemicals trade balance in Qatar grew by an average 9.8% per annum. Growth of chemicals trade balance between 2008 and 2012 in Oman and Kuwait are highest in the GCC. In Kuwait trade balance grew by 18.4% per annum, followed by Oman with growth of 13.3% per annum. In 2012, chemicals trade balance in Oman reached 4.9 million tons, while in Kuwait it was slightly lower 3.1 million tons. 20.9 6.5 9.4 3.0 4.9 1.6 3.1-0.4 0.2-2.2-0.4 Saudi Arabia Qatar Oman Kuwait Bahrain UAE 2008 2012 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 Gulf Petrochemicals & Chemicals Association 81 GCPA_2012_Facts_Figures_1111.indd 81 12.11.13 18:35

9. International Trade (2012) Detailed analysis of GCC chemicals export to Asia GCC Chemicals Export to Asia by Country (2002-2012) Others 21% Japan 6% Indonesia 6% Malaysia 2% Australia 6% South Korea 2% Thailand 5% 2002 $US 3.7 billion 6% Pakistan Bangladesh 2% Japan 3% 5% Others Indonesia 3% 27% China Malaysia 3% 27% China Australia 4% 11% India 8% Singapore South Korea 4% Thailand 5% Pakistan 5% Taiwan 5% Singapore 13% 2012 $US 28.8 billion 11% India Source: GCC Customs Authorities, United Nations, 2013 Asia has traditionally been the largest export market for GCC chemicals producers accounting for half of the GCC exports in terms of volume or $US28.8 billion. In 2012, GCC recorded export of chemicals to about 30 Asian countries. Out of them, 12 countries account for 95% of all export to this region: China, India, Singapore, Taiwan, Pakistan, Thailand, South Korea, Australia, Malaysia, Indonesia, Japan and Bangladesh. China is the largest Asian export market for GCC chemical registering $US8.7 billion worth of chemicals import from the GCC. The majority of the chemicals that China imports from the GCC are petrochemicals and polymers. India is the second largest market for GCC export to Asia. $US5 billion worth of chemicals were exported to India in 2012. Half of the export is comprised of petrochemicals, polymers and fertilizers which accounted for 27% and 13% accordingly. GCC chemicals export to Singapore in 2012 is valued at $US3.8 billion out of which polymers represent the majority share of 70%. Petrochemicals export in 2012 is valued at $US24.2 billion which accounted for 84% of total chemicals export to Asia. About 40% of commodity petrochemicals export to Asia is bound for China, followed by India which accounts for 17%. GCC polymers export to Asia in 2012 is valued at $US10.6 billion which is 36.7% of GCC chemicals export to Asian countries. Major Asian destinations for GCC polymers export are China, Singapore and India. Another notable product segment of GCC chemicals export to Asia is fertilizer, export of which reached $US2.9 billion. The major markets for GCC fertilizers industry in Asia are Thailand, India and Australia. Thailand accounted for 26% of fertilizers export to Asia, followed by India and Australia which accounted for 22% and 16% respectively. GCC exports to about 30 countries in Asia. 82 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 82 12.11.13 18:35

9. International Trade (2012) GCC chemicals export to Asia by product segment GCC Chemicals Export to Asia by Product Segment, 2012 Total:$US 28.8 bn Petrochemicals 84.0% Polymers Other petrochemicals 47.3% 36.7% 10.0% Fertilizers 0.1% 4.2% 1.5% Industrial Gases Inorganic chemicals Specialty chemicals Basic Inorganics 14.3% 0.2% Consumer chemicals Source: GCC Customs Authorities, United Nations, 2013 Petrochemicals export to Asia accounts for 84% of total export. Export of fertilizers represent 10% of the total export to Asia. Gulf Petrochemicals & Chemicals Association 83 GCPA_2012_Facts_Figures_1111.indd 83 12.11.13 18:35

9. International Trade (2012) Detailed analysis of GCC chemicals export to Europe GCC Chemicals Export to Europe by Country (2002-2012) Others 5% France 2% France 3% 8% Turkey UK 3% UK 5% Malta 4% 10% Malta 4% Belgium Poland 4% 3% Others 26% Turkey Spain 18% 2002 2.8 million tons Spain 8% Italy 12% 2012 7.8 million tons 32% Netherlands Italy 15% Netherlands 14% 24% Belgium Source: GCC Customs Authorities, United Nations, 2013 Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for GCC chemicals industry. Europe accounted for 12.9% of GCC total chemicals exports in 2012 or 7.8 million tons. Based on the export volume, European Union member states import about 70% of GCC chemicals export bound to Western, Central and Eastern Europe. GCC chemicals reach about 50 countries located in Western, Central and Eastern Europe. Out of them, nine countries account for 97% of total volume of chemicals exported to this region: Turkey, Belgium, Netherlands, Italy, Spain, Poland, Malta, UK and France. Turkey is the largest European market for the GCC when members of European States are counted separately. In 2012, chemicals export to Turkey reached 2 million tons which accounts for 26% of total 8% share a decade ago. Volume of GCC export to Turkey grew by CAGR 25% between 2002 and 2012 with polymers representing the majority followed by petrochemicals. Belgium is the second main European destination. In 2012, GCC exported 1.9 million tons to this country out of which polymers and petrochemicals represent the majority. With the increasing volume of export, Belgium s receipt of total GCC export to Europe has more than doubled from 10% in 2002 to 24% in 2012. While The Netherlands continue to be one of the main European destinations, its share has dropped from 32% in 2002 to 14% in 2012. Of the 1 million tons of chemicals shipment bound for The Netherlands, 90% are petrochemicals. Europe is the second largest export destination for GCC chemicals industry. GCC chemicals export to Europe is valued at $US8.4 billion, out of which polymers account for 65.7% or $US5.5 billion. Petrochemicals export to Europe reached $US2.6 billion in 2012 and is the second major product group exported to this region. The Netherlands, Turkey and Belgium import the majority of GCC petrochemicals shipped to Europe. Europe is the second largest export destination for GCC chemicals industry. 84 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 84 12.11.13 18:35

9. International Trade (2012) GCC Chemicals Trade Flows with Major Geographic Blocks, 2012 Europe Export: 7.8 million tons Import: 2.4 million tons Africa Export: 4.9 million tons Import: 0.4 million tons Middle East (Excl GCC) Export: 1.6 million tons Import: 0.7 million tons GCC Chemicals trade Balance of $US 32.6 bn China Export: 9.3 million tons Import: 1.2 million tons Asia (excl China) Export: 20.8 million tons Import: 4 million tons North America Export: 3.4 million tons Import: 0.8 million tons Latin America Export: 0.9 million tons Import: 0.5 million tons World Export: 60.7 million tons Import: 13.6 million tons Source: Gulf Petrochemicals & Chemicals Association, GCC Customs Authorities, United Nations, 2013 Gulf Petrochemicals & Chemicals Association 85 GCPA_2012_Facts_Figures_1111.indd 85 12.11.13 18:35

9. International Trade (2012) GCC Chemicals Trade Flows with Major Geographic Blocks, 2012 Europe Export: $US 8.4 bn Import: $US 5.7 bn Africa Export: $US 4.3 bn Import: $US 0.4 bn Middle East (Excl GCC) Export: $US 2.6 bn Import: $US 0.3 bn GCC Chemicals trade Balance of $US 32.6 bn China Export: $US 8.6 bn Import: $US 1.7 bn Asia (excl China) Export: $US 20.2 bn Import: $US 4.9 bn North America Export: $US 1.9 bn Import: $US 2.3 bn Latin America Export: $US 1 bn Import: $US 0.2 bn World Export: $US 52.7 bn Import: $US 20.1 bn Source: Gulf Petrochemicals & Chemicals Association, GCC Customs Authorities, United Nations, 2013 86 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 86 12.11.13 18:35

9. International Trade (2012) 10. GCC Intra-Regional Trade (2012) Gulf Petrochemicals & Chemicals Association 87 GCPA_2012_Facts_Figures_1111.indd 87 12.11.13 18:35

9. 10. International GCC Intra-Regional Trade (2012) Trade (2012) GCC intra-regional chemicals trade GCC Intra-Regional Chemicals Export, Million Tons CAGR (2002-2012) 13% 3.5 3.7 3.0 2.8 2.1 1.1 2002 2004 2006 2008 2010 2012 Source: Gulf Petrochemicals & Chemicals Association (GPCA), United Nations, 2013 Over the past decade intra-gcc chemicals trade has grown at an average rate of 13% per annum. While regional chemicals trade is increasing, it remains small when compared to other export destinations: in 2012 it accounted for 6% of the total export volume. Transport infrastructure, which is one of the enablers that affects the scale of regional trade, has become increasingly important for the GCC countries. As described in previous chapters GCC regional trade of chemicals represents only a third of total chemicals imports. Although the extra-gcc chemicals import requires understanding on the product level, regional trade can be promoted through investments in strategic areas such as transport infrastructure which improves linkages between countries and therefore facilitates trade. The majority of chemicals delivered within the region are polymers and other petrochemicals which account for 30.1% and 38.1% respectively. In 2012, GCC countries have exported 1.4 million tons of petrochemicals to the neighboring states growing at an average 31% per annum between 2002 and 2012. As for the polymers, there were around 1 million tons of intra-gcc exports in 2012. Polymers exports within the region grew at an average rate of 12% per annum between 2002 and 2012. Due to market proximity, regional trade of consumer chemicals and specialties has been on the rise over the past decade. Intra-GCC export of consumer chemicals grew by CAGR (2002-2012) of 12% and specialties by 11% per annum. In 2012, intra-gcc export of consumer chemicals reached 0.45 million tons which accounts 12% of total chemicals exports within the region. Similarly, regional export of specialty chemicals reached 0.3 million tons in 2012 growing by an average 11% per annum between 2002 and 2012. The majority of specialty chemicals exported within the region are paints & inks, industrial additives and paint additives. Within the basic inorganics segment, the majority of intra-gcc exports are attributed to inorganic chemicals, exports of which reached 0.3 million tons in 2012. Over the past decade intra-gcc chemicals trade grew by 13% p.a. 88 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 88 12.11.13 18:35

10. GCC Intra-Regional Trade (2012) GCC intra-regional chemicals trade GCC Intra Regional Chemicals Export by Segment, 2012 Total: 3.7 million tons Petrochemicals 68.2% Other petrochemicals 38.1% Polymers 30.1% 1.8% Fertilizers 1.1% 8.1% Industrial Gases Inorganic chemicals Basic Inorganics 11.0% 8.8% Specialty chemicals 12.0% Consumer chemicals Source: Gulf Petrochemicals & Chemicals Association (GPCA), United Nations, 2013 Polymers account for 30.1% of GCC intra-regional trade. Basic, intermediate and ne chemicals account for 38.1% of GCC intra-regional trade. Gulf Petrochemicals & Chemicals Association 89 GCPA_2012_Facts_Figures_1111.indd 89 12.11.13 18:35

9. 10. International GCC Intra-Regional Trade (2012) Trade (2012) GCC intra-regional trade in chemicals export Share of Intra-GCC Exports in GCC Chemicals Export Volume, 2012 28% 44% 65% 91.9% 93% 94% 99.5% 94% 72% 56% 35% 8.1% 7% 6% 0.5% 6% Industrial Gases Consumer Chemicals Specialty Chemicals Inorganic Chemicals Polymers Petrochemicals (Excl Polymers) Fertilizers Chemicals Total Intra-GCC Export Extra-GCC Export Note: Based on volume of export Source: Gulf Petrochemicals & Chemicals Association, United Nations, 2013 Intra-GCC trade accounts for 6% of the total GCC chemicals export measured in volume terms. While the of other regions of the world for the regional chemicals industry, when looking at the individual product segments, there are products which are mostly exported within the GCC region. Industrial gases and most of the consumer products are usually shipped within shorter distances. Therefore, Intra-GCC trade represents a large share in total GCC exports of these products: 72% of industrial gases and 56% of consumer chemicals are shipped regionally. Leading intra-gcc exporters within these segments are Qatar and Saudi Arabia: Qatar is the largest regional exporter of industrial gases and Saudi Arabia the largest regional exporter of consumer chemicals. Another notable segment is specialty chemicals: 35% of total export by volume took place within the GCC region. Looking at various specialty chemicals, GCC producers of dyes and pigments ship 73% of their total export volume to GCC countries. Intra-GCC trade within this segment is dominated by Saudi Arabia. This segment usually serves the paper, textile and plastic production industries. Intra-GCC exports of crop protection chemicals which include products that help control harmful insects and products control germs and pests, represents 48% of the total export volume. This segment primarily serves the farm sector, although other sectors such as household, public sector and utilities are important as well. Intra-GCC trade within this segment is lead by the UAE which accounts for 80% of total shipments within the region. Regional export of cosmetic additives accounts for 41% of total export within this product segment. These are functional chemicals which are used to improve performance and provide special properties to various consumer products. Saudi Arabia is the largest exporter of cosmetic additives in the region. Within the paints and inks and paint additives segment, intra- GCC trade represents 25% of the total export. This segment serves packaging, newspaper and publishing/ printing industries. Intra-GCC trade of these products is lead by Saudi Arabia which represents the majority of export volume. 90 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 90 12.11.13 18:35

10. GCC Intra-Regional Trade (2012) GCC intra-regional chemicals trade in value terms Petrochemicals 58.1% GCC Intra-Regional Chemicals Exports, $US million 706 1'022 2'100 Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 2'604 GCC Chemicals Exports by Product Segment, 2012 Total. $US 4.8 bn 3'185 4'814 2002 2004 2006 2008 2010 2012 Polymers 33.5% Other petrochemicals 24.6% CAGR (2002-2012) 21.2% 0.5% Fertilizers 1.5% 3.0% Industrial Gases Inorganic chemicals Basic Inorganics 5.0% 16.6% Specialty chemicals 20.3% Consumer Chemicals Intra-GCC chemicals trade has reached $US 4.8 billion. Over the past decade, it has grown by an average of 21.2% per annum. Intra-GCC chemicals GCC overall chemicals exports. In 2012 it represented only 9.1% of the chemicals export in value terms. Looking at the composition of intra-gcc chemicals export, polymers account for the majority. In 2012, $US1.6 billion worth of polymers were shipped within the region which represents 33.5% of the regional chemicals trade. Other commodity petrochemicals represent the second largest product segment in the regional chemicals trade. While volume wise they account for the majority, the relatively lower value of commodity petrochemical products in comparison with polymers is responsible for their lower share in intra-gcc chemicals trade in terms of value. In 2012 intra-gcc bulk petrochemicals exports reached $US1.2 billion. Intra-GCC export of consumer chemicals represent 20.3% of the regional chemicals trade measured in value terms. In 2012 it reached $US0.9 billion registering an average growth of 20% per annum between 2002 and 2012. Similarly, intra-gcc export of specialty chemicals is estimated at $US0.8 billion with an average growth over the past decade of 20% per annum. Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013 Gulf Petrochemicals & Chemicals Association 91 GCPA_2012_Facts_Figures_1111.indd 91 12.11.13 18:35

9. 10. International GCC Intra-Regional Trade (2012) Trade (2012) GCC intra-regional trade in chemicals import Share of Intra-GCC Trade in GCC Chemicals Import Volume, 2012 32% 55% 58% 70% 74% 82% 87% 72% 68% 45% 42% 30% 26% 18% 13% 28% Industrial Gases Consumer Chemicals Polymers Petrochemicals (Excl Polymers) Specialty Chemicals Fertilizers Inorganic Chemicals Chemicals Total Note: Based on volume of export Source: Gulf Petrochemicals & Chemicals Association, United Nations, 2013, Note: Due to the shipment period intra-regional import may not equal to intra-regional export in the same period. Intra-GCC trade represents only 28% of total chemicals imported by the GCC countries measured in terms of volume. Looking at each individual product segment, the highest share of intra-gcc trade in all imports has been achieved by the industrial gases and consumer chemicals segments. Industrial gases and most of the consumer products are usually shipped shorter distances. Therefore, Intra-GCC trade represents a large share in total GCC import of these products: 68% of industrial gases and 45% of consumer chemicals are imported from within the region. Another notable segment is plastics in primary forms. Intra-GCC trade represented 42% of their total import measured in terms of volume. UAE is the largest importer of plastic resins; in 2012 over 1 million tons of plastics in primary forms were imported by the UAE alone. Among other chemicals, inorganic chemicals are the largest product segment in GCC chemicals import. Intra-GCC import accounts for 13% of the total 4.5 million tons of inorganic chemicals imported by the GCC countries. Qatar and Saudi Arabia are major importers of inorganic chemicals. Since inorganic chemicals are produced by using naturally occurring minerals, some of these minerals may not be available the domestic demand. Intra-GCC trade represents 28% of total chemicals imported by the GCC. 92 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 92 12.11.13 18:35

10. GCC Intra-Regional Trade (2012) 11. Employment (2012) Gulf Petrochemicals & Chemicals Association 93 GCPA_2012_Facts_Figures_1111.indd 93 12.11.13 18:35

9. 11. International Employment Trade (2012) (2012) Employment in GCC chemicals industry by country Employment in the GCC chemicals industry, thousands people Employment (Thousands) 160 140 120 100 80 60 40 20 83.6 4.9 4.4 21.5 1.8 3.5 93.2 5.4 5.5 26.0 CAGR (2008-2012) 13.5% 2.0 4.2 102.9 5.5 5.1 31.5 1.9 4.8 117.2 5.8 7.0 38.1 47.5 50.2 54.1 58.8 1.9 5.5 138.7 6.2 9.6 38.1 76.5 2.0 6.3 0 2008 2009 2010 2011 2012 Note: Source: National statistical authorities, UNIDO, GPCA, 2013 In 2012, more than 138,000 people were employed by direct employment by the industry total number of people who work in the manufacturing plants, as well as people who work outside the plant but who belong to, and paid by, the company, such as sales representatives, supply chain personnel, supporting administration. Direct employment grew by an average annual growth rate of 13.5% from 2008 to 2012. In 2012 alone direct employment grew by 18% in comparison with 2011. Saudi Arabia is the largest employer retaining 55% of the regional workforce in the petrochemicals sector or 76,500 employees. Since 2008, chemicals industry employment is Saudi Arabia has grown on average by 12.7% per annum which is slightly lower than an overall GCC employment growth of the sector during the same period. United Arab Emirates is the second largest employer in the chemicals sector with more than 38 000 employees which represents 27% of region s total. With the expansion of UAE chemicals sector over the past years, the employment has grown by an average 15.4% per annum between 2008 and 2012. Chemical s sector s in Qatar employed more than 9,600 employees in 2012 and accounted for 7% of region s total workforce in the sector. With the chemicals sector expansion in this state, employment has doubled since 2008 when Qatar employed around 4 400 people. Oman and Kuwait have similar level of employment in the chemicals sector. In 2012, each of these countries employed more than 6,000 people.. While both Oman and Kuwait have seen an upward trend in their country s employment level, Oman has grown faster. Between 2008 and 2012, employment growth in Oman was 15.7% per annum while in Kuwait it was 5.7% per annum. Bahrain is a minor producer in the region and therefore its employment in chemicals sector accounts for minor share of 1% in region s total employment with modest employment growth of 2.6% per annum between 2008 and 2012. 94 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 94 12.11.13 18:35

11. Employment (2012) How many jobs depend on the chemicals industry? Total Chemicals Related Employment in 2012 (thousands people) 416.1 554.7 138.7 Direct Employment Indirect Employment Total Chemicals Related Employment Source: National statistical authorities, GPCA Estimates, 2013 The chemicals industry creates jobs not only within the industry itself but also generates employment indirectly. Such indirectly generated jobs can also be found in chemicals processing and manufacturing goods. Chemicals companies spend on equipment, maintenance, food and other services from local and foreign contractors and suppliers. All of the industries that create these indirect jobs are known as multipliers. Generally the amount of indirect employment generated by chemicals industry exceeds its direct employment. In the GCC direct chemicals industry s employment in 2012 reached 138.7 thousand people. However, total employment related to the chemicals industry (direct and indirect jobs) is estimated at around 555 thousand people. Total employment related to the chemicals industry is estimated at around 555 thousand people. Gulf Petrochemicals & Chemicals Association 95 GCPA_2012_Facts_Figures_1111.indd 95 12.11.13 18:35

9. 11. International Employment Trade (2012) (2012) Chemicals Industry s employment: GCC vs. Global Top Employers in Chemicals Industry 2012 (thousands) China European Union India United States Russia Brazil Japan Indonesia GCC Thailand Mexico Ukraine South Korea Vietnam Malaysia Iran Turkey South Africa Egypt Canada 605 513 400 270 214 173 140.7 136.6 135 122 121 89 75 72 61 60 60 51 1'189 2'334 Note: Chemicals excluding pharmaceuticals, Countries and regions with more than 50 thousands of employees Source: CEFIC, GPCA, 2013 Based on estimations of International Labor Organization there are about 20 million people employed in the global chemical, pharmaceutical and rubber and tire industries. Employment in the global production of chemicals (excluding pharmaceuticals, plastics and rubber processing) is estimated at 7 to 8 million people. Employment in GCC chemicals industry accounted for 2% of world s total in 2012 This rank the GCC 9th among countries employing more than 50 thousands employees in the chemicals industry. China is the largest employer within the global chemicals industry, employing more than 2.3 million people in 2012 combined with one of the highest average employment growth between 2008 and 2012 of 6.3% per annum. 96 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 96 12.11.13 18:35

11. Employment (2012) Employment Growth in the Chemicals Industry Employment Growth in Chemicals Industry of Selected Economies, CAGR (2008-2012) GCC China Indonesia Vietnam Turkey Malaysia South Korea Ukraine India Thailand Brazil Egypt South Africa Iran Canada -0.3-0.6-0.8-2.0-2.6 3.6 3.1 2.7 2.2 1.9 1.1 1.0 0.4 0.2 0.1 0.0 0.0 Russia Mexico European Union United States Japan 4.9 6.3 13.5 Note: Chemicals excluding pharmaceuticals, Countries and regions with more than 50 thousands of employees Source: CEFIC, GPCA, 2013 Gulf Petrochemicals & Chemicals Association 97 GCPA_2012_Facts_Figures_1111.indd 97 12.11.13 18:35

9. 11. International Employment Trade (2012) (2012) Employment in GCC chemicals industry by occupation GCC Chemicals employment by occupation type, 2012 (Thousands) 50.9 (36%) 140.7 (100%) Bahrain 51% 49% Oman 55% 45% 89.8 (64%) UAE 55% 45% Qatar 66% 34% Saudi Arabia 69% 31% Kuwait 69% 31% Manufacturing type Service type Total Manufacturing type Service type Note: Manufacturing type occupations refer to early stages of manufacturing. Service occupations include R&D, sales, marketing, services, administrative support and management Source: GPCA Estimates based on questionnaire, 2013 Manufacturing includes a range of activities in addition to production. Manufacturing companies increasingly employ workers in non-production jobs which consist of service related occupations. Service activities such as R&D, marketing and sales, customer support and administration account for a large share manufacturing company activities. Around 36% of GCC chemicals employment is related to services. Growing manufacturing industry in the region supports local service related industries such as telecom, travel, logistics providers, banks and IT services. industry is similar to manufacturing. The majority of the employees are involved in actual production process. In 2012 manufacturing related personnel accounted for 64% of total number of employees which translate into 89 900 people. Within the service type occupations, administrative support occupations accounted for 18% of total employees in the chemicals industry in 2012, followed by sales & marketing (4%) and supply chain professionals (3%). 98 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 98 12.11.13 18:35

11. Employment (2012) Employment in GCC chemicals industry by occupation GCC Chemicals employment by occupation, 2012 Employment (Thousands) 160 140 120 100 80 60 40 89.8 (64%) 25.6 (18%) 6.1 (4%) 3.9 (3%) 15.3 (11%) 140.7 (100%) 20 0 Manufacturing Administration Sales & Marketing Supply Chain Others Total Source: GPCA Estimates based on questionnaire, 2013 Manufacturing related personnel accounted for 64% of employees in the GCC chemicals industry. Gulf Petrochemicals & Chemicals Association 99 GCPA_2012_Facts_Figures_1111.indd 99 12.11.13 18:35

9. 11. International Employment Trade (2012) (2012) Employment in GCC manufacturing and chemicals industry GCC Manufacturing Employment, Top 5 Industries Employment (Thousands) 2'000 1'800 1'600 1'400 1'200 1'000 800 600 400 200 0 1'145 461 75 83.6 155 177 1'329 558 82 93.2 179 CAGR (2008-2012) 12.4% 1'488 648 88 102.9 201 198 213 1'713 98 117.2 194 219 235 268 294 764 221 244 1'829 2008 2009 2010 2011 2012 724 117 138.7 265 290 Fabricated metal products (ISIC 28) Non-metallic mineral products (ISIC 26) Food products & beverages (ISIC 15) Chemicals & chemical products (ISIC 24) Rubber & plastic products (ISIC 25) Other Industries Source: National statistical authorities, UNIDO, GPCA estimates, 2013 The GCC Chemicals industry is part of the manufacturing sector which is an important strategic sector for GCC region. Employment represents part of the social contribution of the industry to economy and human capital. GCC chemicals industry is the 4th largest industry in terms of employment and it employs 8% of the total manufacturing workforce. While industry generates 31.3% of manufacturing GDP, it represents 8% of the total number employed in the manufacturing sector. Since 2004, employment in the chemicals sector has more than doubled from 57,900 in 2004 to 140,700 in 2012. This is in line with the overall growth of employment in the manufacturing sector during the same period. GCC chemicals industry employs 8% of the total manufacturing workforce. 100 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 100 12.11.13 18:35

11. Employment (2012) Workforce nationalization in GCC chemicals industry GCC Workfroce nationalization in chemicals industry by country GCC Chemicals industry, 2012 GPCA Members, 2012 Oman 52% Oman 58% Saudi Arabia 48% Saudi Arabia 63% Bahrain 35% Bahrain 75% GCC 34% GCC 56% Kuwait 25% Kuwait 61% Qatar 10% Qatar 19% UAE 9% UAE 23% Source: GPCA Questionnaire, National Statistical Authorities, 2013 Workforce nationalization is one of the growing challenges in the GCC. Workforce nationalization in the GCC chemicals industry was estimated at 34% in 2012. In contrast, workforce nationalization among GPCA members was 56% in the same year. GPCA members cover the following industry segments: Petrochemicals, Polymers and Basic Inorganics (Fertilizers and Inorganic Chemicals) referred as major segments in this section. Since these major segments account for about 90% of the total chemicals production in the GCC region, their workforce nationalization rate can be taken as a proxy for the the following characteristics in the GCC industry of chemistry: More than half of employees in major industry segments are national citizens: Figures for Oman, Saudi Arabia, Bahrain and Kuwait show that more than half of employees working in major chemcials industry segments are national citizens. Notably, workforce nationalization in Bahrain and Saudi Arabia in 2012 is the highest at 75% and 63% respectively. Kuwaiti chemicals companies employment of nationals reached 61% of total workforce in 2012, followed by Oman where workforce nationalization was 58% in 2012. Chemicals industry in Saudi Arabia, Kuwait and Qatar employ the largest number of nationals than in other manufacturing sectors: The chemicals industry in Qatar employs the largest number of nationals than in other manufacturing sectors approximately 1000 national citizens in 2012.This represented 45% of all the nationals in the sector which employed 21%. There is a similar trend in Saudi Arabia; approximately 36 500 nationals employed in the chemicals industry represented 28% of all nationals working for companies in the manufacturing sector. GPCA estimate that this is the largest number among other manufacturing industries. In Kuwait, 1500 of nationals employed in the chemicals sector in 2012 represented 21% of all nationals in the manufacturing sector. Kuwait s chemicals sector was in 2012. Gulf Petrochemicals & Chemicals Association 101 GCPA_2012_Facts_Figures_1111.indd 101 12.11.13 18:35

9. 11. International Employment Trade (2012) (2012) Employee productivity in GCC chemicals and manufacturing sector GCC Employee Productivity Index, Chemicals and Manufacturing (2007=100) 160 140 120 100 80 60 40 121.9 93.8 20 0 2007 2008 2009 2010 2011 2012 Chemicals & Chemical products Manufacturing Source: UNIDO, Statistical Authorities, GPCA Estimates, 2013 volume measure of output to a measure of input. Employee productivity is particularly important in the economic and statistical analysis as it reveals a dynamic measure of economic growth, competitiveness, and living standards within an economy. Employee productivity (and all that it takes into account) helps to explain the principal economic foundations that are necessary for both economic growth and social development. Employee productivity depends on various issues including technological as well as value of the output. Employee productivity in the GCC chemicals industry has been growing at an average annual growth rate of 3% between 2008 and 2012. In comparison, employee productivity in the GCC manufacturing sector has declines by 2.7% during the same period. Looking at the historic year-on-year growth of employee productivity in chemicals and manufacturing sectors, productivity in the chemicals sector was growing at higher rate than the manufacturing total except for 2012 when it is estimated that manufacturing has outpaced chemicals sector due to the growth in other sectors. In 2012 labor productivity fell by 12% mostly due to the decline in prices of chemical products which affected the value of the chemicals sector s output in the region. At the same time manufacturing sector productivity has increased by 2.7% year-on-year in 2012. 102 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 102 12.11.13 18:35

10. GCC Intra-Regional Trade (2012) 12. Sales Revenue (2012) Gulf Petrochemicals & Chemicals Association 103 GCPA_2012_Facts_Figures_1111.indd 103 12.11.13 18:35

9. 12. International Sales Revenue Trade (2012) GCC chemicals industry sales revenue GCC Chemicals Sales Revenue by Country UAE 3.2% Kuwait 4.2% 0.6% Bahrain Oman 4.8% UAE 3.8% Kuwait 4.0% 0.6% Bahrain Oman 4.2% Qatar 12.0% 2011 $US 81.7 billion Qatar 12.6% 2012 $US 81.7 billion 75.2% Saudi Arabia 74.8% Saudi Arabia Note: Doesn t include sales revenue of Industrial Gases, various Specialty Chemicals, Consumer Chemicals and Pharmaceuticals Source: Gulf Petrochemicals and Chemicals Association, 2013 Chemicals industry sales revenue is reported by the GPCA member companies and covers the following business segments: Petrochemicals (including basic petrochemicals, intermediates, downstream chemicals, polymers, fertilizers and inorganic chemicals. This includes sales of goods produced by the business of producers of Industrial Gases, various Specialty Chemicals and Consumer Chemicals. In 2012, the industry reported US$81.7 billion in sales there have been several country-wise adjustments. In most of the GCC countries sales revenue declined in 2012 when compared to 2011. However, due to the new production capacity coming on stream in 2012, chemicals industry s sales revenue has increased in Qatar and the UAE. In Qatar it grew by 4.6% reaching $US 10.3 billion and in the UAE by 17.7% reaching $US 3 billion. As a result of this increase Qatar s share in the regional industry s sales revenue has increased from 12% in 2011 to 12.6% in 2012 and UAE s share from 3.2% in 2011 to 3.8% in 2012. Looking at the composition of sales revenue, the which account for 45.4% of region s total in 2012, followed by polymers which accounted for 22.1%. of GCC chemicals capacity, sales revenue from these products reached US$55 billion which represents the major share of 67.5% of region s total. GCC sales revenue from fertilizer production business in 2012 is estimated at $US6.6 billion which accounted for 8.1% of GCC s total. 104 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 104 12.11.13 18:35

12. Sales Revenue (2012) GCC chemicals industry sales revenue GCC Chemicals Sales Revenue by Segment, 2012 Total: $US 81.7 bn Performance Chemicals 1.0% Polyolefins 6.4% 3.2% Others Basic Chemicals 6.7% Innovative Plastics 7.1% 45.4% Chemicals Fertilizers 8.1% Polymers 22.1% Source: Gulf Petrochemicals and Chemicals Association, 2013 Chemicals represent the majority of GCC sales revenue or 45.4% In 2012, GCC chemicals industry reported US$81.7 billion in sales revenue Gulf Petrochemicals & Chemicals Association 105 GCPA_2012_Facts_Figures_1111.indd 105 12.11.13 18:35

9. 12. International Sales Revenue Trade (2012) Share of GCC in Global Chemicals Sales Revenues Global Chemicals sales, $US billion Global Chemicals sales 2012 Total: $US 4,017 billion 3'199.9 3'857.7 4'017.8 Latin America 4.6% 2.0% GCC 1.9% Rest of the World NAFTA 16.8% 30.5% China Europe 21.5% 22.7% Asia (Excl China and GCC) 2010 2011 2012 Source: 2012 was a challenging year for the chemicals industry worldwide. Margins were lower especially for the chemicals producers from oil-based feedstock. Basic chemicals producers were able to maintain their sales position due the production expansion and high demand from industrial sectors. For other companies, and specialties has provided opportunities to retain Figures, global chemicals and pharmaceuticals sales grew year-on-year by 4.2% in 2012, down from 17.2% in 2011. Global chemicals and pharmaceuticals sales in 2012 reached $US 4,017 billion. The growth in 2012 was mainly driven by Asia and China in particular. While China continued to be a major importer of chemicals, it is at the same time one of the largest producers globally. Chemicals sales of Chinese producers reached $US 1,223.7 billion in 2012 which accounted for 30.5% of world s total. China s Sinopec, for instance, is ranked the second largest chemical company by ICIS in term of sales revenues in 2012 with $US 64,894 million. In all other regions, chemicals sales revenues saw a decline in 2012. The highest year-on-year decline of 4.3% was observed in Europe where political and eurozone crises were felt by the chemicals producers. Total chemicals sales revenues in Europe are estimated at $US 864.6 billion which accounts for 21.5% of world s total. As per ICIS s ranking, among top 10 largest chemical companies 4 are European: Europe s BASF is the largest chemicals company in the world with $US 95.100 million in sale revenues, followed by Shell ranked 6th, Lyondell Basell Industries ranked 7th and INEOS ranked 10th. 106 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 106 12.11.13 18:35

12. Sales Revenue (2012) Share of GCC in Global Chemicals Sales Revenues While North America remains the leading region in global chemicals production, growth of sales revenues in 2012 was modest 1%, down from 10.4% in 2011. North American, ExxonMobil is 3rd top chemical company worldwide, followed by Dow Chemicals ranked 4th and DuPont ranked 8th. Sales revenues of producers in the GCC represented 2% of the global chemicals sales revenues in 2012. Saudi Arabia s Sabic was ranked by ICIS the 4th largest chemicals company in the world in 2012. Global chemical sales, $US billion US$ billion 2011 2012 2012 Sales Growth China 1043.5 1223.8 17.3% Asia (excluding China and GCC) 895.8 910.4 1.6% Europe 903.5 864.6-4.3% NAFTA 669.0 675.6 1.0% Latin America 188.9 185.6-1.8% GCC 81.7 81.7 0.0% Rest of the world 75.3 76.3 1.4% World 3857.7 4017.8 4.2% Source: Gulf Petrochemicals & Chemicals Association 107 GCPA_2012_Facts_Figures_1111.indd 107 12.11.13 18:35

9. International Trade (2012) 108 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012 GCPA_2012_Facts_Figures_1111.indd 108 12.11.13 18:35

10. GCC Intra-Regional 12. Sales Revenue Trade (2012) 13. Research and Development (2011) Gulf Petrochemicals & Chemicals Association 109 GCPA_2012_Facts_Figures_1111.indd 109 12.11.13 18:35