11 August 2011 11:52 [Source: ICIS news]
LONDON (ICIS)--The expansion of Austrian plastic maker Borealis’s joint venture Borouge project in ?xml:namespace>
Borealis reported a net profit of €168m ($240m) for the three months to the end of June, on the back of sales of €1.9bn. This was an increase from the same period of 2010, when the company recorded a net profit of €92m and sales of €1.6bn.
CEO Mark Garrett said that the second phase of capacity at the company’s Abu Dhabi Polymers Company (Borouge) joint venture with state energy giant Abu Dhabi National Oil Company (Adnoc) drove profitability at the firm as polyolefin margins softened in
“You are definitely seeing the effect of the Borouge 2 ramp-up,” he said. “We are now getting to 100% production rates and getting the product out to the market.”
Borouge completed the second-phase expansion of its production complex at Ruwais, 240km (150 miles) west of the city of
The ethane gas feedstock for the plant is provided by Adnoc, and is understood to be heavily discounted compared with input costs elsewhere in the world. Borouge is targeting the Asian market,
Strong margins at Borouge and good sales into
“We believe
Despite the company’s strong position, Garrett believes that the remainder of the year will see lower returns as fiscal and economic crises impact Western countries in particular. He expects to see profits continue to fall for a second successive quarter in the three months to September – net profits were €174m in the first quarter, 3.4% higher than the second – before rising slightly at the end of the year.
The remainder of the year will be tough, he said, but the company does not expect its profit to “come crashing down” as it did in 2008–2009 on the back of the global financial crisis.
Looking to the future, Garrett said that Borealis continues to bet on the Chinese market, and
Borouge will increase its overall plastics capacity to 4.5m tonnes/year by 2014 as part of a third-phase expansion of its Ruwais facilities, and plans further investment in compounding facilities in China, he said. Borouge has two compounding plants in
“Borouge 3 will be a success,” Garrett said. “I believe that the Chinese will manage their economy successfully over the next five years.”
Borouge is also likely to invest further in new facilities in Abu Dhabi in the future, Garrett said, as state-run firms Abu Dhabi Basic Industries Corporation (Adbic) and Abu Dhabi National Chemicals Company (Chemaweyaat) also look to build new petrochemicals capacity in the country.
“There will be more growth and investment in
Future capacity additions could include more specialty plastics, he added. Part of the Borouge 3 expansion is a cross-linked polyethylene (XLPE) plant which uses Borealis’s proprietary technology, while the company plans to open its new Abu Dhabi-based innovation centre by the end of 2011.
“We always try to take our products to the highest level in the value chain,” Garrett said. “We don’t run Borouge as a commodity business. We will develop it the same way as Borealis.”
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($1 = €0.70)
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