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. References29

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) endproducts. 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--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. y 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. y Xylene

The demand of xylene is very high as its 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. y 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. y 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 & Brothers, 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. y 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. y 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. y 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. y 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 Benzene

Local

Selling

Price Range/ Metric TON

Local Buyer Companys Name M.K.Trader s, Habib & Brothers, Portcity Poly &

Companys Name

Galaxy Trade International, Dowla Brothers & CO.

Tk.7500080000

Accessories. Toluene Galaxy Trade International, SRA Corporation. Tk. 9000095000 Winshine Corporation, Trade Navigation, Interlink PLC, Xylene Galaxy Trade International, Tk. 50,00075000 Winshine Corporation, Trade Navigation, Interlink PLC, SBPS Tk. 65000110,000 LP Gas LP Gas Company, KleenHeat Gas, Tk.700010,000 Top Trade

International Top Trade

International

SPL Corporation LDPE Jhinu Enterprise, Era Versatile TK. 30, RFL, M.K.Trader

000 to TK.

42, 000

s, Habib & Brothers, Portcity Poly &

Accessories, Diamond Garments Industries, Ispahani Agencies LLDPE Mohiuddin Brothers, Enterprise, Kingfisher Woodpecker Galaxy International. Co., Trade Jhinu TK. 36,000 to TK. 40, 000 RFL, Trade International , Winshine Top

Corporation, Trade Navigation, Interlink PLC,

HDPE

K.M. Plastics, Jhinu Enterprise, Glory Ltd Asia

TK. 12,000 to TK. 14, 000

Top

Trade

International , Kingfisher Woodpecker Co.

Ethyl glycol

Dunhil Corporation, Galaxy International. Trade

TK.

92,

Geotex Trading, Iqbal Brothers Inc, EXIMCO Group,

000 to TK. 95, 000

Aftab Automobile s. Benzene Ethylene Benzene Styrene/ Polystyre ne Poly Propylen e Jhinu Galaxy International Enterprise, Trade TK. 57, Bombay Food Ispahani Co., etc. Co., Dowla Brothers & CO. TK. 15, RSRM Co., BSRM Co., KSRM Co.

900 to TK. 16, 200

000 to TK. 65, 000

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 & Brothers, 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, RFCCs 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 Kuwaits 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 Kuwaits 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 companys 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 Delhis 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 Extensive distribution Customer focus Economies of scale Totals

Weighting

International Market Asian Europe US

3.5

1.2

5 5

4 3.2

1.8 2.1

1.5 1.0

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 AsiaUSA -Asia USA Europe Europe +$93 -$160 -$67 +$27 +$13.3 +$20 +$7 -$53 -$27 -$40 -$14 -$26 -$13.7 -$20 -$7

Asia LDPE TK. 42K LLDPE TK. 40K HDPE TK. 14k Ethyl glycol TK. 95K Benzene Ethylene TK. Benzene 17K Styrene/Polystyrene Poly Propylene TK. 65K 30K to 36K to 12K to 92K to 16K to $400 $480 $160 $122 7 $213

Europe

USA $560 $533 $187 $126 7 $227

$493 $507 $173.3 $1247 $220

57K to

$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.

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

Strengths
Cost Location

Weaknesses
Equipment

Opportunities
Low Risk

Threath Govt. Regulation Currency Flactuation Time Delay

Strengths  Cost: We dont need to invest in production cost and labor cost.  Location: No need any location to build a factory.

Weaknesses  Equipment: No equipment is available here all the equipment need to be import from foreign which cost is too high. Opportunities  Low risk: Although we import the entire product from international market risk will be minimum or zero because products 100% checked by them.

Threats  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

Strengths
Market position Financial resources

Weaknesses Changing currency rate

Opportunitie
Economic of Scale Availability of Machineries Earning Foreign Currency

Threath
New Govt. Regulation Equipment maintenance cost

Strengths:  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. Weaknesses  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. Opportunities:  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.

Threats:  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) b)
http://www.bizhelp24.com/marketing/distribution-channels.html http://books.google.com/books?id=yvgWAQAAMAAJ&q=Local+distribution++channel+of+Petro chemicals+in+Bangladesh&dq=Local+distribution++channel+of+Petrochemicals+in+Bangladesh &hl=en&ei=V6EYTrWKJobJrAfXkrzPAQ&sa=X&oi=book_result&ct=result&resnum=2&ved=0CC8 Q6AEwAQ

c) d) e) f) g) h)

http://www.infobanc.com/indexp_petrochem.htm http://www.gongchang.com/listp-1752-18-petrochemical_products/ http://bd.countrysearch.ec21.com/buyers/petrochemicals.html http://bd.countrysearch.ec21.com/buyers/petrochemicals.html Bangladesh Petroleum Corporation. Kohinoor Chemical Industries Ltd.