Business
GCC’s chemical industry has planned or committed investments worth $61bn until 2025: GPCA
January 26, 2023 | 10:14 PM
GCC’s chemical industry has planned or committed investments worth $61bn until 2025 despite "considerable reduction” in global investments, an analysis has shown.GCC chemical producers continued to invest in environmentally responsible projects as part of their ESG agenda, mainly in energy efficiency and air pollution in 2021, Gulf Petrochemicals and Chemicals Association (GPCA) said.The GCC's share in global chemical revenue has increased to 2.4% in 2021, almost reaching the historical average.However, the GCC chemical industry’s capital investments reduced by more than half to $4bn in 2021 as companies are rationalising their investments post-pandemic, putting many projects on hold, and prioritising recovery, while others are coming close to completion.GPCA noted the GCC is well positioned as the world entered uncertain times. The regional chemical industry exceeded pre-pandemic sales figures and recorded the "highest sales value” of $95.9bn (since 2013), a 77.2% increase on sales in 2020. This was due to the increasing demand and prices of chemical products globally.GPCA said strong demand for both commodity and specialty chemicals had kept prices robust throughout 2022 as well.Although the GCC chemical industry is export-oriented, exporting 68.8mn tonnes in 2021, the region imported 20mn tonnes resulting in a positive trade balance of 48.6mn, up by 12% Y-o-Y.China and India remain the top destinations for GCC chemical exports, accounting for 26% and 14%, respectively, of total exports. Petrochemicals and polymers dominate GCC chemical exports, while value added chemicals are the top imported chemicals into the region.Global competition and collaboration have made it crucial for the GCC to establish leadership and nurture its trade relationships as more and more countries compete and collaborate with each other. The existing GCC Free Trade Agreements (FTA) with Singapore, the Greater Arab Free Trade Area (GAFTA) and the European Free Trade Association (EFTA), as well as the negotiations under consideration with the UK, India, South Korea, Australia and China and other key markets play an important role to achieve this vital objective."Businesses in each country can focus on producing and selling goods that best utilise their resources, while other businesses import goods that are scarce or unavailable locally,” GPCA said.In terms of the chemical industry’s contribution to the manufacturing GDP, GPCA analysis finds that it behaves in a similar trend to oil prices along the years.The GCC chemical sector’s economic impact is substantial, making it a key industry in the region’s economy contributing 5.6% to total GDP and 51% to manufacturing GDP in 2021.The industry’s economic value is also demonstrated by supporting more jobs across different channels with a total employment of 210,200, and a 64% nationalisation rate, GPCA noted.
January 26, 2023 | 10:14 PM