Nigeria Plastic Production Q4 2017

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Supplying Nigeria’s growing plastics industry will remain a one-firm operation for some time despite particularly promising growth the plastic packaging industry.

Locally-owned Quantum Petrochemical Company Limited will begin operations by Q1 2018 at its $1.5 billion methanol plant in Nigeria’s Akwa Ibom State. Workers broke ground on the 150-hectare facility three years ago. When completed, it will produce up to 3,000MT of methanol per day at full capacity.

The new plant will double the number of firms currently involved in polyethylene (PE) and polypropylene (PP) production, which is a key input for the country’s flexible packaging manufacturers. Currently, according to the Raw Materials Research & Development Council of Nigeria, local PE and PP supply are dominated by Port Harcourt-based Indorama Eleme Petrochemicals Limited.

Founded in 1990 as Eleme Petrochemicals Company Limited (EPCL), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), the firm was acquired by Indorama Corporation in 2006. Indorama Eleme has an annual nameplate capacity of 360,000MT and 120,000MT of PP and PE respectively, and which accounts for Nigeria’s total production of the materials. It also produces ethylene, butene, and olefins on-site.

Indorama Eleme has faced little competition for most of the past two decades, following the termination of PP and PE production by NNPC subsidiary Warri Refining & Petrochemical Company in the 1990s.

However, that is changing rapidly. In addition to the pending arrival of Quantum Petrochemical, domestic conglomerate Dangote Group has also begun work on an $18 billion project in Lagos which will bring more than double current capacity. Once it is completed in 2019, the plant will have a nameplate capacity of 780,000MT of PP and 500,000MT of PE. The complex will also include an integrated single-line oil refinery and fertilizer plant.

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The increase in investment is not surprising, given the surge in demand for plastics in Nigeria, particularly from packaging firms.

The country’s plastic and packaging sector have grown rapidly in recent decades, from around 50 companies at its inception in the 1960s to more than 3,000 manufacturers currently, according to the National Agency for Food and Drug Administration and Control (NAFDAC).

Unsurprisingly growth in the sector closely mirrors that of the FMCG industry which, according to McKinsey, has seen a 40% expansion in demand for packaged goods over the last five years. This has contributed to a compound annual growth rate of roughly 12% over that same period for packaging producers, according to UK consultancy PCI Films. In spite of the slowdown in consumer spending following the recession, McKinsey expects this relatively steady growth to continue – albeit somewhat slower – at 7% CAGR over the next decade.

 

CULLED FROM: Asoko Insights