STRATEGIC MANAGEMENT

PROJECT – 02

Submitted To

Mohammad A. Arafat

Lecturer, School of Business

SUBMITTED BY:

Nurulain (0720127)

Barshan Khandoker (0730137)

Mostafa Redwanul Arefin (0730192)

MIZANUR RAHMAN (0820092)

NAFIZ AL RAZI (0820046)

Table of Content

Name Page No.

A. Introduction ……………………………………………………………. 01

B. Current Local Market Demand. Demand projection for 5 years……… 03

C. What industry are they used for? Uses breakdown by industry……….. 07

D. Local market price…………………………………………………….. 13

E. Annual import value of Petrochemical products;

Distribution channel of Petrochemical products &

SBPS in Bangladesh…………………………………………………. 20

F. International market demand forecast, price………………………….. 22

G. Competitor Analysis (Local & International market)………………….25

H. SWOT Analysis………………………………………………………..27

I. References………………………………………………………………29

Introduction:

Option 1: Catalytic Reforming/ plat-Former unit with Aromatic extraction unit

The Aromatic Extraction unit extracts aromatic from reformate produced in the Catalytic

reforming Unit (CRU). The reformate is first split into light and heavy fractions. Light reformate

is introduced into the Extractor column where a counter current flow of solvent extracts the

aromatic compounds. The Raffinate stream containing the non-aromatic fraction of the feed is

fed to the raffiante splitter column. The products from this column, light and heavy raffinate are

used for gasoline, diesel and jet fuel blending. The solvent-aromatics mixture from the Extractor

column to be fractioned into xylene and a benzene-toluene mixture. Xylene is shipped via marine

vessels; the benzene-toluene is mixture is feedstock to the Thermal Hydrodealkylation Unit

(THDU) where benzene is produced.

Benzene

Benzene is the largest-volume aromatic used to produce a number of petrochemical

intermediates such as ethyl benzene for styrene production, cumene for phenol and acetone,

cyclohexane and nitrobenzene. Benzene is used to make nylon intermediates. Ethylbenzene is the

largest chemical outlet for benzene at around 52% and nearly all is consumed in the production

of styrene. . Major markets for styrene include polystyrene (PS), expandable polystyrene (EPS),

styrene copolymers resins, styrene-butadiene rubber (SBR) and unsaturated polyester resins.

Around 43% of styrene is used in the manufacture of polystyrene, representing almost a quarter

of benzene demand.

Special Boiling Point Solvents (SBPS)

The special boiling point solvents range provides a versatile group of solvents, which consist of

paraffins and cycloparaffins in the C5-C9 range. Due to the way they are manufactured,

including deep hydrogenation, their aromatics content is very low. Application areas for these

products are in quick-drying lacquers, paints, varnishes and inks where they are used as diluents

and solvents. They are also components in the preparation of tyres, rubber solutions, adhesives,

cleaners, and pressure-sensitive tapes, and are used as extraction solvents in the chemical,

pharmaceutical, cosmetics and food industries.

Toluene

The main chemical use of toluene is to make benzene and xylenes using a number of

technologies. Toluene is also used in solvent applications and is consumed in the manufacture of

toluene diisocyanate (TDI) which is used in the manufacture of polyurethane foams. According

to BASF (Aden Aniline and Soda Factory), Toluene can be a raw material for polyurethane

elastomers. More than 50% of toluene demand is used in the production of benzene and xylenes,

around 25% in solvents and 7-8% in the TDI, benzoic acid and caprolactam. Around 15% of

demand is accounted for by gasoline.

Xylene

Xylene or xylol is a mixture of three structural isomers of the aromatic hydrocarbon

dimethylbenzene. Xylene is a clear, colorless, sweet-smelling liquid that is very flammable. It is

usually refined from crude oil in a process called alkylation. It is also produced as a by-product

from coal carbonisation derived from coke ovens, extracted from crude benzole from gas, or by

dehydrocyclodimerization and methylating of toluene and benzene. It is also manufactured from

reformate.

Paraxylene

Paraxylene (PX) is the largest volume isomer of the mixed xylenes. Around 98% of PX demand

comes from the polyester chain via the one of its intermediates purified terephthalic acid (PTA)

or dimethyl terephthalate (DMT).

LPG (Liquefied petroleum gas)

Liquefied petroleum gas (also called LPG, GPL, LP Gas, autogas, or liquid propane gas) is a

flammable mixture of hydrocarbon gases used as a fuel in heating appliances and vehicles. It is

increasingly used as an aerosol propellant and a refrigerant, replacing chlorofluorocarbons in an

effort to reduce damage to the ozone layer.

Option-2: Naphtha cracker with ethylene/propylene plants and petrochemical units.

Petrochemical products may be broadly classified into two groups (a) basic, and (b) end-

products. The 'basic product group' includes ethylene, propylene, butadiene and aromatics, while

'end-product group' includes plastic, synthetic fibers and elastomers. These petrochemical products

offer an ideal substitute for conventional materials such as wood, metals, jute, natural rubber, etc.

At present, the petrochemical industry of the country is limited to production of PVC Polyvinyl

Chloride based on imported VCM, synthetic fibers, i.e. polyester, polyamide, aromatics

(Benzene, Toluene, and Xylene), Purified Terepthalic Acid (PTA) and carbon black. A Naptha

Cracker Unit is regarded as one of the best routes to produce various petrochemicals.

Petrochemical products currently form an essential base for the production of a wide range of

industrial, intermediate and consumer products. Infact, the petrochemical industrial sub-sector

continues to play an important part in the development of the manufacturing sector the world

over.

During last three decades repeated efforts have been made to develop a project capable of

producing basic petrochemicals. In this connection, numerous studies have been carried out for

production of basic petrochemicals i.e. ethylene, propylene, etc. utilizing alternate feed stocks

i.e. naptha, associated gases (ethane, propane), natural gas and molasses (a byproduct of sugar

industry). However, despite interest and some efforts, no significant development has taken place

as far as production of basic petrochemicals in the country is concerned.

Factors responsible for non-development of basic petrochemical industry in the country may

include:

• High capacity of world scale basic petrochemical production facilities.

• Complexity and high level of the technology involved.

• High level of capital outlay required.

• Market size limitations vis-à-vis world scale plants at that time

• Relatively lower differential in tariffs of imported raw material and end product in the country.

Market Analysis:

Current Local Market Demand. Demand projection for 5 years.

Special Boiling Point Solvent

The demand for SBPS is high, as these are solutions that are used in various industries. SBPS

are imported by almost all of the chemical importers as it is one of the basic raw materials of

many industries. Most large corporation bring this for their own usage purpose as raw materials.

Like, the textile industry, rubber industry, pharmaceuticals etc. The current local market demand

for SBPS is about 450,000-500,000tons/year. It is expected to increase by 20-25% as more

demand for this product.

Benzene

Benzene is used in the production of tires and rubber, printing, chemicals, plastics, auto repair

etc. Mostly benzene is imported from china and Singapore. Local importer includes, Galaxy

Trade International, SRA Corporation, WATA Chemicals, etc. Almost 100,000 tons/year of

benzene is imported in Bangladesh; the demand growth of benzene is slow, it is expected to rise

by 5-10% in 5 years.

Xylene

The demand of xylene is very high as it’s one of major uses is in the textile industry and since

Bangladesh is more into the textile industry (polyester) the demand is higher than ever. The

amount of mixed xylene imported per year is around 0.6ml ton/year and other types are about

0.3ml ton/year. The demand of xylene is expected to go up by 20-30% in 5years time. Mostly are

imported by the textile industries for their uses, apart from them Standard Trading Corporations,

Galaxy Trade International, etc. are also importing.

Toluene

The main use of toluene is to make benzene and xylene, it is also used as solution but this

application is expected to continue to weaken because of environmental and health regulations

restricting solvent emissions. The demand of toluene has fall in recent years in Bangladesh. The

consumption of toluene is almost 200,000 tons/year, but is going through a period of slow

growth. The demand is expected to be the same or might fall a little due to restrictions imported.

LPG

LP Gas Company was given the responsibilities of supplying LPG throughout the country as

an alternative fuel to firewood and kerosene. Company was given the responsibilities of

supplying LPG throughout the country as an alternative fuel to firewood and kerosene.  The

Chittagong LPG plant has bottling capacity of 10,000 M.ton of    LPG per shift per year though

its average production is 13,000 M.ton per year over the last five years. The bottled LPG is

being marketed through three marketing companies of BPC. The other plant of the company at

Kailashtila, Sylhet has been bottling over 7,000 M.tons per year. This company on an average

has been supplying over 20,000 M.tons of LPG to various parts of the country which is roughly

15%-20% of the current demand. Total demand for LPG is round about 300,000 tons/year. It is

expected to go up by about 50-60% since there is shortage of supply of gas and also its increased

demand for household. Apart from LP Gas Company, Galaxy Trade International, SPL

Corporation, Kleenheat Gas are the importer of LP Gas in Bangladesh.

Low Density Polyethylene (LDPE):

Low-density polyethylene (LDPE) is a thermoplastic made from petroleum.

Most low-density polyethylene (LDPE) is imported from Polyolefin Company Ltd.,

Singapore. Major distributors and wholesalers in Bangladesh are – RFL, M.K. Traders,

Habib & Brother’s, Portcity Poly & Accessories, Diamond Garments Industries,

Ispahani Agencies, etc. Every year they are importing near in total one thousand Metric

tons LDPE. Last 5 years, they increased their imports around 25 %. So, it is estimated

that, for the next 5 years local market demand will be increased.

Linear Density Polyethylene (LLDPE):

LLDPE is imported by RFL, Top Trade International, Kingfisher Woodpecker Co.,

Winshine Corporation, Trade Navigation, Interlink PLC, Galaxy Trade International,

etc. Every year they are importing near in total five hundred Metric tons LLDPE. Last 5

years, they increased their imports around 50 %. So, it is estimated that, for the next 5

years local market demand will be increased as much. Because number of PVC pipe

production companies are increased in Bangladesh. Most of LLDP are imported from

India and China.

High Density Polyethylene (HDPE):

HDPE is also used in the same sector like – LLDPE. It is also imported by Top Trade

International, Kingfisher Woodpecker Co., Winshine Corporation, Trade Navigation,

Interlink PLC, Galaxy Trade International, etc. Every year they are importing near in

total five hundred Metric tons LLDPE. Last 5 years, they increased their imports around

50 %. So, it is estimated that, for the next 5 years local market demand will be

increased. Most of HDPE are imported from India and China.

Ethyl Glycol:

Geotex Trading, Dunhil Corporation, Galaxy Trade International, Iqbal Brothers Inc,

EXIMCO Group, Aftab Automobiles and other automobiles and refrigeration

companies are importing Ethyl Glycol in Bangladesh. Last year almost $250,000 L/C is

opened for importing Ethyl Glycol. Though A/C, fridge and vehicles are using

tremendously, so it is estimated that the demand for Ethyl Glycol will be increased.

Benzene-Ethylene Benzene-Styrene/Polystyrene:

RSRM, BSRM, KSRM, etc steel and rolling companies are importing polystyrene. In

2010, Bangladesh Chemical Industries and Corporation said that almost 2000 metric ton

polystyrene was imported. It is estimated that, for the next 5 years the import quantity

will be increased.

Poly Propylene:

Poly bags are banned in Bangladesh. But some other reason we need poly propylene.

Last 5 years, the number of using poly propylene is decreasing. So, next 5 years, it is

predicted to go down. In 2009, only 70 metric ton poly propylene was imported from

China, Malaysia, South Korea, Japan and India. But in 2010, it decreased to only 43

metric tons. Local market demand is decreasing.

What industry are they used for? Uses breakdown by industry.

Benzene

Benzene is the largest-volume aromatic used to produce a number of petrochemical intermediates such as ethyl benzene for styrene production, cumene for phenol and acetone, cyclohexane and nitrobenzene.

Ethylbenzene is the largest chemical outlet for benzene at around 52% and nearly all is consumed in the production of styrene. Major markets for styrene include polystyrene (PS), expandable polystyrene (EPS), styrene copolymers (such as acrylonitrile-butadiene-styrene (ABS) resins, styrene-acrylonitrile (SAN) and styrene-butadiene latexes), styrene-butadiene rubber (SBR) and unsaturated polyester resins.

Around 43% of styrene is used in the manufacture of polystyrene, representing almost a quarter of benzene demand. Historically, growth in PS had been good but it was hit hard by the global recession and has not recovered to previous levels in North America and western Europe. In addition, high benzene prices have forced PS prices to a level where demand has suffered.

US-based consultants CMAI forecast that world styrene demand will grow at an average of 3%/year over the next five years. Demand growth in the US and Europe will remain fairly flat while Northeast Asia, and especially China, account for the growth in demand.

The second largest outlet for benzene, accounting for 19% of demand, is cumene which is nearly all consumed in phenol production with acetone formed as a coproduct. Historically, demand for phenol was driven by phenolic resins but this market has matured and been overtaken by bisphenol-A (BPA).

The strong demand for polycarbonates, historically at 10%/year and above, has driven BPA production. The rising popularity of DVDs and CDs accounted for much of the growth of polycarbonates but this is now slowing as CDs are being replaced by MP3 players, high internet bandwith and USB drivers.

The maturing of the polycarbonate industry will impact the growth in phenol demand. CMAI expects phenol demand growth will slow to an average of 4%/year to 2011.

The third largest outlet for benzene, accounting for 13% of demand, is cyclohexane which finds its way primarily into the nylon chain via caprolactam and adipic acid. Cyclohexane demand is growing only slowly while hydrogen availability is becoming an issue.

The fourth main derivative of benzene is nitrobenzene, which can be used to make aniline. This is one of the faster growing derivatives of benzene, driven by the demand for polyurethanes.

Benzene is used to make a number of other chemical intermediates such as alkylbenzene used in detergents, maleic anhydride (unsaturated polyester resins) and chlorobenzenes (engineering polymers).

Toluene

The main chemical use of toluene is to make benzene and xylenes using a number of technologies. In the hydrodealkylation (HDA) process, toluene and hydrogen are reacted to make benzene only. A toluene disproportionation (TDP) plant will convert toluene to benzene and xylenes while there are selective toluene disproportionation (STDP) processes that produce a paraxylene-rich stream. The transalkylation (TA) process takes toluene and C9 aromatics to produce xylenes.

Toluene is also used as a solvent but this application is expected to continue to weaken because of environmental and health regulations restricting solvent emissions. The definition of solvent end use and quality varies around the world. In most industrialised countries, solvent grade toluene is a high quality stream where purity is essential as environmental exposure levels must be quantified.

Toluene is consumed in the manufacture of toluene diisocyanate (TDI) which is used in the manufacture of polyurethane flexible foams used in upholstery, mattresses and automotive seats. Smaller uses for TDI include polyurethane elastomers and coatings.

Other minor chemical uses include the manufacture of phenol, caprolactam, nitrobenzene, benzoic acid and benzyl chloride.

In non-chemical uses, toluene is used in large quantities as an octane booster in gasoline but most of that portion is not removed from refinery streams.

There are three grades of toluene: TDI grade of 99+% purity; nitration grade at 98.5-100%, so called because it was used to make nitrotoluene, but now is used in solvents and TDP and HDA plants; and commercial grade of 96% for gasoline blending and HDA feedstock.

Xylene

Xylene is a clear, colorless, sweet-smelling solution of three aromatic hydrocarbon isomers produced from crude oil through a process called alkylation. Xylene consists of three distinct isomers: paraxylene, orthoxylene and metaxylene. Xylene is both naturally occurring and manmade, and is widely used as a solvent in the leather, rubber and printing industries. Other applications of xylene include chemical intermediates, and high-motor and aviation gasoline blending agents. Xylene is also used in breathing devices (inhalers) for administering artificial respiration because of its intoxicating properties.

Xylene is a raw material in the production of a monomer (a simple compound with molecules that join together to form polymers) called terephthalic acid. Terephthalic acid is used in the manufacture of polymers (naturally occurring or synthetic compounds consisting of large molecules). It is a good cleaning agent for silicon wafers and steel. It is also used to sterilize many substances. Xylene is used as a feedstock in the production of petrol. It is also found in small proportions in gasoline and jet fuel.

Xylene is one of the most copiously produced chemicals in the United States. It is extensively used as a thinner and solvent in paints, varnishes, adhesives and inks. A xylene mixture can be used to thin lacquers (a black resinous substance used a natural varnish) when slower drying is desired. Xylene is often used as a solvent in pesticides products.

Paraxylene is one of the isomers of xylene. It is a colorless, volatile liquid. Paraxylene is a very important raw material in the preparation of PET (polyethylene terephthalate) chips, which are extensively used in packing industries, for example, for mineral water and carbonated soft drink bottles. Paraxylene is also used in the manufacture of PTA (purified terephthalic acid), which is a basic petrochemical used in the textile industry for making polyester.

Xylene is used in histology to clean tissue for the preparation of paraffin wax. It is also used to prepare very thin slice of tissues for microscopic examination by making them hydrophobic (i.e. lacking affinity for water) so a coverslip can be used.

The majority (more than 90 percent) of mixed xylene isomers is used for blending into petrol and gasoline, and the rest in different solvent applications for the printing industry, pharmaceuticals, perfumes, fabricated items and pesticide formulations, to name a few. Xylene is also used in the preparation of individual isomers, which are often used in making certain types of plastics.

Special Boiling Point Solvents (SBPS)

SBPS is used in the rubber industry particularly in tyre manufacture, where successive layers of rubber and rubberized fabric are built up. It is also used in the preparation of certain rubber mixes.

The most common end-user use is for thinners for varnish, paint and printing ink formulations when quick drying is required. Also it is used asa diluent for lacquers, enamels, high- grade leather dopes and as a solvent for processing polishes, cleaning and water proofing compounds.

In some countries this special solvent is used for gas generation power plants.

In some cases it is used as solvent for dry-cleaning, where quick drying time and reduced residual odour are desired.

LPG

LPG, otherwise also known as Liquefied Petroleum Gas, is used as fuel, especially for vehicles such as cars and motorcycles. It is actually a mixture of hydrocarbon gases. LPG is also used as an aerosol propellant and refrigerant to avoid damage to the ozone layer (previously caused by other chemicals). There are varieties of LPG - such as propane gas and butane gas - and each of them has its own properties and usage. The main source of LPG is usually from fossil fuel, found underground. In order to obtain LPG, there are factories for refining crude oil and streams of gas and fuel from the ground. The production of LPG involves refining petroleum or crude oil, and was introduced in 1912.

There are many uses for LPG, especially propane gas and butane gas. First, LPG is used to fuel vehicles. The reason people are using LPG as fuel for their vehicles is because it burns cleaner than petrol and diesel. However, the only down side is it may damage the valve and shorten its life (although this is hotly disputed). Still, it is an excellent choice of fuel for vehicles. There are many gas stations providing LPG as one of the fuels on offer. If you need a 'clean' fuel, LPG would be the best choice compared to other types of fuel.

Another use is as a refrigerant. Propane gas and butane gas are used to make hydrocarbon refrigerants. Hydrocarbons are known to be more energy efficient and cheaper than other chemicals, which is why it is suitable to be used as refrigerants. CFCs have a very bad impact on the ozone, as it damages the ozone layer thus increasing the green house effect and global warming (again, this too is hotly disputed).

Another popular use is as a cooking fuel. LPG is very popular, especially among countries like India and other Asian countries. LPG is used as a cooking fuel for households and even businesses such as restaurants. As for propane, it is more popularly being used as fuel for barbeques and portable stoves. This is because propane has a low boiling point, so it will vaporize once it is released from the container. Butane, on the other hand, is famously bottled as fuel for lighters and deodorants. When propane and butane combine together, they become LPG.

Believe it or not, LPG and renewable energy can work side by side - especially in colder seasons such as winter, when there is lack of sunlight for a solar panel to generate enough power for heating. At these times, LPG can be used as a back-up or secondary fuel in generating the energy for the household. For example, in order to heat water in winter, LPG is used alongside a solar panel to provide enough energy for this purpose.

Overall, LPG is a good choice of fuel, especially for vehicles such as cars if you want to save on fuel and have a cleaner burning fuel when compared to petrol and diesel). However, if your vehicles are not suitable for LPG fuel, you will need to modify your vehicles at an authorised dealer.

LDPE is used for packaging like foils, trays and plastic bags both for food and

non-food purposes. Used as protective coating on paper, textiles and other

plastics, for instance in milk cartons.

LLDPE is used in pipes for industrial and agriculture use, cable and wire insulation

sheathing, domestic wares, appliance parts. 

HDPE is used in pipes for industrial and agriculture use, cable and wire insulation

sheathing, domestic wares, appliance parts.

Ethyl glycol is commonly used as an antifreeze agent in automobile cooling

systems. It is also used in deicing solutions for aircraft and boats. In pure form it

is a colorless clear liquid with a sweet taste and a slightly syrupy texture. Other

uses include solvents for the paint and plastic industry, photographic developing

solutions, hydraulic brake fluids and ink for stamp pads and ballpoint pens. 

Benzene Ethylene Benzene Styrene/Polystyrene is used in stainless steel, zinc,

and/or mild steel tanks or drums and is usually transported by tank auto and

trucks.

Poly Propylene is used in reusable shopping bag at home or in cars, to acquire

plastic material bags, etc.

Local market price.

Name of

the

Aromati

cs

Local Selling

Company’s Name

Price

Range/

Metric

TON

Local

Buyer

Company’s

Name

Benzene Galaxy Trade

International,

Dowla Brothers &

CO.

Tk.75000-

80000

M.K.Trader

s, Habib &

Brother’s,

Portcity

Poly &

Accessories.

Toluene Galaxy Trade

International, SRA

Corporation.

Tk. 90000-

95000

Winshine

Corporation,

Trade

Navigation,

Interlink

PLC,

Xylene Galaxy Trade

International,

Tk.

50,000-

75000

Winshine

Corporation,

Trade

Navigation,

Interlink

PLC,

SBPS Tk. 65000-

110,000

Top Trade

International

LP Gas LP Gas Company,

KleenHeat Gas,

SPL Corporation

Tk.7000-

10,000

Top Trade

International

LDPE Jhinu Enterprise,

Era Versatile

TK. 30,

000 to TK.

RFL,

M.K.Trader

42, 000 s, Habib &

Brother’s,

Portcity

Poly &

Accessories,

Diamond

Garments

Industries,

Ispahani

Agencies

LLDPE Mohiuddin

Brothers, Jhinu

Enterprise,

Kingfisher

Woodpecker Co.,

Galaxy Trade

International.

TK. 36,000

to TK. 40,

000

RFL, Top

Trade

International

, Winshine

Corporation,

Trade

Navigation,

Interlink

PLC,

HDPE K.M. Plastics, Jhinu

Enterprise, Asia

Glory Ltd

TK. 12,000

to TK. 14,

000

Top Trade

International

, Kingfisher

Woodpecker

Co.

Ethyl

glycol

Dunhil Corporation,

Galaxy Trade

International.

TK. 92,

000 to TK.

95, 000

Geotex

Trading,

Iqbal

Brothers

Inc,

EXIMCO

Group,

Aftab

Automobile

s.

Benzene

Ethylene

Benzene

Styrene/

Polystyre

ne

Dowla Brothers &

CO.

TK. 15,

900 to TK.

16, 200

RSRM Co.,

BSRM Co.,

KSRM Co.

Poly

Propylen

e

Jhinu Enterprise,

Galaxy Trade

International

TK. 57,

000 to TK.

65, 000

Bombay

Food Co.,

Ispahani

Co., etc.

Annual import value of Petrochemical products (mainly products mentioned

below). Distribution channel of Petrochemical products & SBPS in Bangladesh.

Annual Import Value of Petrochemical Products:

Bangladesh Imports were worth 3229.2 Million USD in April of 2011.

Bangladesh imports mostly petroleum product and oil. Bangladesh main imports

partners are China (17% of total), India, Indonesia, Singapore and Japan. This

page includes a chart with historical data for Bangladesh's Imports.

Distribution channel of Petrochemical products & SBPS in Bangladesh:

A distribution channel is a method of getting a product to its consumer.

Distribution affects the place or path through which consumers can buy and

receive the product. A distribution channel may be an on-site store, a virtual

store, a retailer, a wholesaler, an agent, a telemarketer or direct mail.

a. Producers: China, Japan, Malaysia, South-Korea, Kuwait, Saudi Arabia,

U.A.E., India, Germany, U.S., U.K., Canada and other countries.

b. Consumers: Various PVC Pipe making companies, Plastic Bag

producers, Automobiles and Refrigeration industry, Cable ware

producers, Paint Companies, etc.

c. Retailer: Iqbal Brothers Inc, Bismillah Trading, M.K.Traders, Habib &

Brother’s, Galaxy Trade International, WATA Chemicals, etc.

Diagram: Distribution Channel of Petrochemical Products in Bangladesh.

d. Wholesaler: Bangladesh Petroleum Corporation Ltd, Kohinoor Chemical

Company, Rekit Benkizer Company, Galaxy Trade International, Trade

Navigation, Winshine Corporation, etc.

e. Agent: Trade Adviser Ltd, Lub-rref (Bangladeh) Ltd, Shourav Group of

Companies Ltd, etc.

International market demand forecast, price.

Asian market of LDPE, LLDPE, HDPE, Polypropylene,

Polystyrene:

LDPE prices this week raced higher in Asia. Prices firmed in tandem with gains

recorded in upstream ethylene rates on the one hand coupled with strong buying

interest in select parts of Asia on the other. Also supporting firmer LDPE

numbers was tight availability of product across the region. CFR Far East Asia

and CFR South East Asia prices of general purpose LDPE were assessed up on

Thursday at the USD 1600/mt to USD 1605/mt levels, a week on week gain of

more than USD 70/mt. A polymerupdate source in China meanwhile said that

Sinopec Qilu restarted its LDPE plant located in Zibo. The LDPE plant has an

annual production capacity of 140,000 mt/annum. Currently, Sinopec Qilu is

believed to be building on its inventories and it will be a fortnight before its

LDPE reaches the spot markets. In China meanwhile, buying activity has slowed

as local players are concerned about falling global energy prices. Also curbing

purchase interest are measures adopted by the government to curb credit.

Sinopec Corp is reported to have revised lower its ex factory prices in East

China by Yuan 200/mt to Yuan 13,500/mt this week.

LLDPE prices in Asia this week were assessed flat in some parts of Asia while

in other parts, priced firmed. CFR Far East Asia prices were assessed flat at the

USD 1415/mt levels while CFR South East Asia prices were assessed up at the

USD 1450/mt levels. In key markets like China, the buying mood is dull.

Upstream ethylene prices are showing signs of softness owing to waning

demand trends on the one hand and reports of improved availability on the other.

This has impacted purchase sentiments in the downstream PE markets with bids

for LLDPE in China heard down this morning at below the USD 1400/mt levels.

In China this week, contrary to market expectations, Sinopec hiked its ex-works

price of LLDPE this week by Yuan 200/mt to Yuan 11300/mt.

An industry source based in South Korea informed a polymerupdate team

member that a maintenance turnaround at an HDPE plant operated by Korea

Petrochemical Industry Company (KPIC), South Korea is likely to be

undertaken ahead of schedule. The plant is planned to be taken off stream for a

maintenance turnaround in early April 2011. The shutdown will remain in force

for around one month. The shutdown of the HDPE plant will coincide with the

shutdown of a cracker at the same location. It has an ethylene production

capacity of 470,000 mt/year and a propylene production capacity of 350,000

mt/year and is set to undergo a maintenance turnaround in early April for around

one month. Located at Onsan, South Korea, the HDPE plant has an output

capacity of 530,000 mt/year. The plant was originally scheduled to undergo a

maintenance turnaround towards the end of May 2011.

Propylene prices continued to inch higher in Asia with rates on Tuesday firming

on the back of growing concerns about regional supply tightness. A propylene

seller a polymer update team member spoke with said, “the spot supply situation

is tight. While the start of the turnaround season in Asia is partially responsible

for the availability constraints, RFCC’s in Japan impacted by the earthquake has

also hit production of propylene and has tightened supply. Demand is also

strong. As a result prices of propylene in Asia have climbed.” FOB Korea prices

of propylene were assessed up at the USD 1540/mt levels with offers heard up at

above the USD 1550/mt levels. The Kuwait Styrene Company (TKSC)

announced a net profit of USD 81 million for the fiscal year ending December

31, 2010. These profits were realized due to a number of elements, such as

strategic management, highly efficient operations, proper marketing, as well as

the global rise in prices of petrochemical products. Sales value in 2010 has

exceeded USD 600 million, which is a positive sign indicating the continuous

recovery of petrochemical markets. Utmost appreciation and gratitude to all

contributors to this success, especially TKSC Board members, shareholders and

EQUATE Petrochemical Company. Styrene Monomer markets currently enjoy a

positive hike as annual global demand exceeds 4%, especially in light of

escalating gross domestic product growth in emerging economies, such as

China, India and others. As Kuwait’s first and only producer of Styrene

Monomer, TKSC was established in 2004 as an international joint venture

between Kuwait Aromatics Company (KARO) and The Dow Chemical

Company (Dow). EQUATE Petrochemical Company is the single operator of

Greater EQUATE, which includes The Kuwait Styrene Company (TKSC),

Kuwait Paraxylene Production Company (KPPC) and The Kuwait Olefins

Company (TKOC) under one fully integrated operational umbrella at Kuwait’s

Shuaiba Industrial Area.

European market of LDPE, LLDPE, HDPE, Polypropylene,

Polystyrene:

An industry source based in Europe informed a polymerupdate team member

that Sabic Europe will not be accepting additional request for LDPE cargoes for

March delivery. The company has had very low inventory levels in February as

a result of which it has been able to meet only 70 percent of volume requests.

Demand has been healthy, but production issues have been reported at the

company’s plants since the end of January. The company operates three LDPE

units at Geleen, the Netherlands with a combined nameplate capacity of 425,000

mt/year. Out of these, two units were down towards the end of January due to

production issues. It could not be ascertained whether the issues have been

resolved.

LLDPE prices in Europe last week raced higher. With feedstock ethylene

contract rates settling up Euro 60/mt at Euro 1195/mt for March, producers of

LLDPE felt justified in revising their contract rates. LLDPE contract prices were

assessed up at the Euro 1460/mt FD North West Europe and FD Italy levels

while spot prices were assessed up at the Euro 1300/mt FD North West Europe

levels. Supporting the price increase were high prices of crude and naphtha

which also prompted producers polled to confirm their intentions of continuing

to pursue additional increases in a bid to further improve margins.

While in conversation with a polymer update team member last evening, a trader

spoke on buying trends and ruling prices of PP, PE and PVC in the open markets

of Delhi. There were some inquiries seen generated in PP & PE in Delhi’s open

markets today. Prices were driven higher in these grades. Bullish pricing trends

in upstream propylene and ethylene coupled with strong prices of PP and PE in

the rest of Asia are helping improve the buying mood across the Indian

subcontinent. HMHDPE prices in Delhi's open markets were quoting higher at

Rs.78/kg to Rs.78.50/kg levels while HDPE raffia was pegged at Rs.75/kg

levels. HDPE injection was heard at Rs.74/kg levels. HD Blowmoulding was

higher at Rs.75/kg to Rs.75.50/kg levels. LLDPE film was available at Rs.78/kg

levels. Ethylene based PVC was at Rs.52.5/kg to Rs.53/kg levels. LDPE film

was at Rs.78/kg levels. PP raffia was pegged higher at Rs.68.50/kg to Rs.69/kg

levels. PP film prices were upward at Rs.74/kg levels while PP injection was

higher at Rs.68/kg to Rs.69/kg levels.

Competitor Analysis (Local & International market).

Competitor analysis in marketing and strategic management is an assessment of the strengths and

weaknesses of current and potential competitors. This analysis provides both an offensive and

defensive strategic context through which to identify opportunities and threats. Competitor

profiling coalesces all of the relevant sources of competitor analysis into one framework in the

support of efficient and effective strategy formulation, implementation, monitoring and

adjustment.

Competitor analysis is an essential component of corporate strategy. It is argued that most firms

do not conduct this type of analysis systematically enough. Instead, many enterprises operate on

what is called “informal impressions, conjectures, and intuition gained through the tidbits of

information about competitors every manager continually receives.” As a result, traditional

environmental scanning places many firms at risk of dangerous competitive blind spots due to a

lack of robust competitor analysis.

But in this sector there is no one who produces or manufactures LDPE, LLDPE, HDPE,

Polypropylene, Benzene, Ethylene Benzene Styrene/Polystyrene, Polystyrene, Ethyl glycol.

All of the companies in Bangladesh are imported from international market like Asian market,

Europe market and US market. Therefore analysis will go for only price basis which they are

imported through international market.

Market Competitive Strength Rating

Local market

Key Industry

Success Factors

Weighting International Market

Asian Europe US

Extensive

distribution

5 3.5 3 1.2

Customer focus 5 4 1.8 1.5

Economies of

scale

5 3.2 2.1 1.0

Totals 15 10.7 6.9 3.7

This information is taken from the head of HR department of RFL & BSRM Company Bangladesh. He told

us that this information is from 2010. Now in 2011 in prospect of Asian market price has increased 20%

means now it is 12.84 on the scale of 15.

From the above table Asian market is rated higher than Europe on overall (10.7 out of 15, compared to

6.9 and 3.7 ) and distribution networks is also higher (3.5 out of 5) then other markets.

Price Analysis

Name of the Aromatics

Price Range/ Metric TON

International price Differences of local market price from international market price

Asia Europe USA Asia- Europe

USA -Asia USA -Europe

LDPE TK. 30K to 42K

$400 $493 $560 +$93 -$160 -$67

LLDPE TK. 36K to 40K

$480 $507 $533 +$27 -$53 -$26

HDPE TK. 12K to 14k

$160 $173.3 $187 +$13.3 -$27 -$13.7

Ethyl glycol TK. 92K to 95K

$1227

$1247 $1267

+$20 -$40 -$20

Benzene Ethylene Benzene Styrene/Polystyrene

TK. 16K to 17K

$213 $220 $227 +$7 -$14 -$7

Poly Propylene TK. 57K to 65K

$760 $814 $867 +$54 -$107 -$53

In the above chart indicate the difference between the price ranges of the international market. In

our country most of the companies imported from Asia market because here they can save $193,

$27, $13.3, $20, $7, $54, in Asia market compared to the Europe market. Europe and US market

charged too much price than Asia because of quick delivery. In our country most of these market

is captured by Asian market.

Strengths

CostLocation

Weaknesses

Equipment

Opportunities

Low Risk

Threath

Govt. RegulationCurrency FlactuationTime Delay

SWOT Analysis

A SWOT analysis must first start with defining a desired end state or objective. A SWOT

analysis may be incorporated into the strategic planning model. Strategic Planning has been the

subject of much research.

Strengths: characteristics of the business or team that give it an advantage over others

in the industry.

Weaknesses: are characteristics that place the firm at a disadvantage relative to

others.

Opportunities: external chances to make greater sales or profits in the environment.

Threats: external elements in the environment that could cause trouble for the

business.

SWOT Analysis for Local Market

S trengths

Cost: We don’t need to invest in production cost and labor cost.

Location: No need any location to build a factory.

Strengths

Market positionFinancial resources

Weaknesses

Changing currency rate

Opportunitie

Economic of ScaleAvailability of MachineriesEarning Foreign Currency

Threath

New Govt. RegulationEquipment maintenance cost

W eaknesses

Equipment: No equipment is available here all the equipment need to be import from

foreign which cost is too high.

O pportunities

Low risk: Although we import the entire product from international market risk will be

minimum or zero because products 100% checked by them.

T hreats

Government regulation or tax: In our country rules and regulation on import and export

business might be change within 2 or 3 years which will indicate the barriers or threat for

our local market. Therefore tax rate might be higher than before.

Currency fluctuation: It refers the high currency rate. Therefore market pressure goes

up and import low quantity of product.

Time delay:

SWOT Analysis for International Market

S trengths:

Market position: As they export the materials to other countries, so they have a strong

position in international market. It is one of their strength, because other countries cannot

produce these materials. Those countries have to buy these materials from them.

Financial resources: Their financial resources are very high, it is their strength. The

reasons behind these higher financial resources are they make their own equipments and

they have skilled workers.

W eaknesses

Changing currency rate: Changing currency rate can be a threat for international

market, because if the value of currency gets high other countries will stop buying

materials or their volume of import will decrease.

O pportunities:

Economic of Scale: As they produce this product of their own industry that means they

have this resources in their country. They do not need to purchase anything from host

country. By which their economic scale is higher.

Availability of Machineries: They have availability of machineries in their country

which made by other company. By which their cost is minimum because they no need to

pay higher transportation cost and tax.

Earning Foreign Currency: By doing this business international market is earning huge

amount of foreign currency. This is a big opportunity of a country to earn foreign

currency.

T hreats:

New government regulation: sometimes government regulates new rules on export

import policies. If that is against international market it can be a threat for them.

Equipment maintenance cost: every year they spend million dollars on equipment

maintenance, they find it as a threat.

References

a) http://www.bizhelp24.com/marketing/distribution-channels.html

b) http://books.google.com/books?id=yvgWAQAAMAAJ&q=Local+distribution+

+channel+of+Petrochemicals+in+Bangladesh&dq=Local+distribution+

+channel+of+Petrochemicals+in+Bangladesh&hl=en&ei=V6EYTrWKJobJrAfXkrzPAQ&sa=X&oi=b

ook_result&ct=result&resnum=2&ved=0CC8Q6AEwAQ

c) http://www.infobanc.com/indexp_petrochem.htm

d) http://www.gongchang.com/listp-1752-18-petrochemical_products/

e) http://bd.countrysearch.ec21.com/buyers/petrochemicals.html

f) http://bd.countrysearch.ec21.com/buyers/petrochemicals.html

g) Bangladesh Petroleum Corporation.

h) Kohinoor Chemical Industries Ltd.