Dangote petrochemical plant targets $130 billion global polypropylene market

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The Dangote petrochemical plant is expected to boost Nigeria’s non-oil export earnings with the announcement last week that it will start producing polypropylene, petrochemical by-products highly sought after by players in global manufacturing industries, automotive, healthcare and food packaging. The industrial materials will be produced by the $2 billion petrochemical plant located at the Dangote Refinery Complex in Ibeju-Lekki, Lagos State, the commercial capital of Nigeria.

During the announcement in Lagos last week, Devakumar Edwin, Group Executive Director, Strategy, Capital Projects and Portfolio Development, Dangote Industries Limited, said the petrochemical plant would produce 77 different grades of high performance polypropylene at the Nigeria.

“The Dangote petrochemical plant is under construction next to the refinery. The plant will mainly manufacture polypropylene products. We have 77 types of polypropylene, which can serve different uses that we can produce from our petrochemical plant. Currently, the plant is capable of producing approximately 900,000 tons of polypropylene per year. Our petrochemical plant is expected to be the largest in Africa,” Edwin said.

The announcement was welcomed by players in the country’s manufacturing industry who have struggled to find foreign currency to import raw materials for the past two years due to illiquidity in the foreign exchange market. According to some of them, the announcement implies that local producers will easily obtain polypropylene, a development that will save them from the challenges of currency volatility and market illiquidity.

The announcement also came at a time when Nigeria’s fiscal situation was revealed recently by the Minister of Finance, Budget and National Planning, Zainab Usman, who said Nigeria had achieved only 1.23 trillion in revenue in the first four months of 2022 against an expenditure of N4.72 trillion.

Also Read: Dangote Petrochemical to Position Nigeria as Polypropylene Hub – Dangote

For nearly a decade, non-oil exports have been expected to improve the government’s fiscal position as a manifestation of the diversification effort. However, this dream did not materialize. Not only did the nation end up running a N3.09 trillion deficit between January and April 2022 due to Nigeria’s inability to generate the targeted revenues from oil and non-oil exports, but the pressure was too much. on the Nigerian currency, the naira, which depreciated against major international currencies due to market illiquidity.

Nigeria’s non-oil exports, expressed as a percentage of total exports, averaged 10% on a monthly basis from January 2018 to March 2022. during the period, non-oil exports brought in $100 per month. Worse still, Nigeria has been unable to benefit from the global rise in crude oil prices due to crude oil theft, subsidy payments and debt servicing.

According to some stakeholders, adding the Dangote petrochemical plant to the list of non-oil semi-finished export products will not only strengthen Nigeria’s non-oil export structure, but will reduce the stress faced by manufacturers when currency supply. , and contribute to increasing liquidity and external reserves.

“This is a welcome development and positive news for Nigeria. Until now, when the Warri refinery and petrochemical plant were in place and fully functional, the Dangote petrochemical plant would have completed their production. need to earn foreign exchange to increase reserves and strengthen our currency.

“As chairman, NACCIMA Export Group, it increases our export volume which is good for AFCFTA and the 1.2 billion Africans it will serve,” said Ade Adefeko.

Available data showed that the global polypropylene market size is expected to grow from an average of $96.46 billion in 2020 to $130.19 billion in 2028, citing projections from Grandview Research, Future Market Insights, and Fortune Insights.

In 2018, polypropylene trade was worth $27.5 billion, or 0.14% of total global trade, according to the Observatory of Economic Complexities (OEC).

Saudi Arabia topped the export rankings as it sold $5.94 billion worth of polypropylene materials to overseas customers. It was followed by South Korea, $2.39 billion; Germany, $1.77 billion, Belgium, $1.75 billion and the United States, $1.62 billion.

China tops the list of importers with $3.47 billion worth of polypropylene materials. It was followed by Turkey, $2.07 billion; Italy, $1.31 billion; Germany, $1.23 billion and Vietnam, $1.15 billion.

Eighteen African countries traded polypropylene in 2018, according to the OEC. The sum of their import and export trade values ​​was $2.49 billion. The top five countries were Egypt, South Africa, Nigeria, Kenya and Morocco.

But in terms of polypropylene trade deficit, Nigeria reached about $300 million or N128 billion. It was followed by Morocco and Kenya, $170 million each, Tanzania, $87 million; Egypt, $64 million; Ivory Coast, $64 million and Ghana, $50 million, all in 2018.

“Currency volatility makes it difficult for many local producers to import polypropylene materials. Nigeria is in this situation because our refineries are not working. Mind you, we have very good professionals who can produce polypropylene that will meet global standards in Nigeria,” said Adewale Olalekan, Chemical Engineer.

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