With the global petrochemicals markets changing, there is an opportunity for more consolidation and acquisitions, Abdulwahab Al-Sadoun, secretary general of the Gulf Petrochemicals and Chemicals Association, said Tuesday.
"I think the low oil price is driving the leadership of the industry to consolidate the business," Al-Sadoun said as part of a forum at the American Fuel and Petrochemical Manufacturers' International Petrochemical Conference. "I think we will see in the next five years more business consolidation or acquisition."
Al-Sadoun pointed to Equate's acquisition of MEGlobal as one example of recent consolidations in the Middle East. He added that more mergers in the Middle East were likely, but didn't go into details.
"The key driver is critical mass," Al-Sadoun said. "The smaller players are not competitive in this environment."
As a part of the forum, Dow President and CEO Jim Fitterling said critical mass is important in the industry.
"We get to points and times in the cycle where people look at putting their efforts together so their dollars are being put to better use for the investors," Fitterling said.
Recently, Dow has had deals with Corning and DuPont that Fitterling said were to position them to where they think they need to be 10 years from now. Fitterling said the DuPont deal has a large agricultural component that is the driving force behind the deal.
"Deals that we have done recently are the culmination of 10 years of strategic transformational work," Fitterling said.
Tom Crotty, Ineos Europe director and president of the European Petrochemical Association, said there will be continued consolidation in Europe.
"Europe in a number of product areas lacks scale," Crotty said.
In the last few years, Ineos has had a joint venture with BASF in styrene, Styrolution, as well as a joint venture with Solvay in the PVC chain, Crotty said.
In addition to consolidation and acquisitions, Al-Sadoun said the industry might see more globalization of assets.
"We are seeing more export opportunities and more opportunities in the US to take advantage of low-cost feedstocks," Al-Sadoun said.
