Boston, MA -- (ReleaseWire) -- 06/03/2014 -- The South African petrochemicals industry is struggling with poor domestic demand conditions, deteriorating risk and a volatile exchange rate. Margins are coming under pressure with the depreciation of the rand doing nothing to boost the industry's fortunes on external markets. Instead, local producer Sasol is ramping up investment in North America to take advantage of shale gas growth with only incremental increases in domestic capacities.
South Africa's petrochemicals industry production indices showed a declining trend in plastic output throughout 2013, suggesting the weaker domestic market was having a deleterious effect on the sector. On the upside, synthetic rubber production showed a broadly favourable trend. BMI estimates that, based on rebased index data, in 2013, basic chemicals output fell 11.6% year-on-year (y-o-y) and plastic output declined 21%, but rubber grew by 11.3% with a strong performance in Q4. BMI projects local polymer demand will grow at a rate of 4-5% annually over the medium term.
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The prospects for South Africa's economy are deteriorating and we have revised down our forecasts since our last quarterly update. We expect relatively weak real GDP growth in South Africa over the medium term and have revised down our forecast for economic expansion. We are below consensus on South Africa, forecasting real GDP growth of 2.2% in 2014, down from 2.5% forecast in the previous quarter. Our projection is predicated on the Chinese economic slowdown, the troubled domestic mining industry and rising interest rates which will bite the consumer. While this may depress growth in petrochemicals products used in the retail sector, in particular packaging, this will be outweighed by stronger growth in some industrial segments.
- BMI forecasts overall 16% growth in vehicle production between 2013 and 2018, to just under 632,000 units, which along with government support for the automotive parts industry should boost consumption of engineering plastics and...
The South Africa Petrochemicals Report has been researched at source, and features Business Monitor International (BMI)'s market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's South Africa Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the South African petrochemicals industry.
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