octal petrochemicals enters asian market
• Oman-based company starts exports to India and China• Demand for quality plastic packaging expected to surge as domestic retail and consumer markets mature
Oman-based Octal Petrochemicals, a subsidiary of Octal Holding and Co. SAOC, is targeting major growth in plastic packaging demand in Asia and has sent its first shipments to India and China.
Octal, which aims to become the world’s largest producer of APET sheet plastic, expects to achieve combined sales of US$10 million from both markets over the next 12 months, and three times that figure the following year based on current growth trends. Octal opened a sales office in Shanghai in July and claims to be the first company exporting APET sheet to India and China.
Octal Petrochemicals MD Nicholas Barakat said, “Trials with 35 clients in a variety of industries are under way in China, which we hope will translate into export demand of around 500 metric tons per month. India’s growth as an exporter of fruit and vegetables and the development of domestic retail, which is seeing more and more supermarkets open in the country, offers great potential for the use of clear rigid plastic packaging.”
Octal Petrochemicals announced a US$300 million investment in an integrated PET resin and APET sheet manufacturing plant based in Salalah Free Zone in September. Octal is the first company to build a plant in the free zone and production started in late 2006.
Octal recently conducted a feasibility study in India to evaluate the opportunities for APET sheet growth. Barakat said, “Indian demand is still small and the total market in thermoformed plastics for consumer products is less than 75,000 metric tons a year. But India has the potential to be as large as the US, and Octal is positioned at the foot of this exciting growth curve.”
Octal’s APET sheet is in trials with a major grape exporter in India while a multinational cosmetics firm that exports around the world is one of the 35 companies testing the product in China.
Barakat said: “We are talking to major, export-focused brands in China working in the FMCG, cosmetics and printing sectors. With these shipments Octal is the first exporter of APET sheet to India and China, and the first producer to meet the growing demand for quality plastic packaging in these major economies.”
Octal Petrochemicals expects total sales of its APET (amorphous polyethylene terephthalate) sheet packaging to reach US$500 million per annum by the end of 2008, around one fifth of the world market for APET. Global sales exceeded 2,000 metric tons in November, worth more than US$3 million.
Commenting on the choice of Oman as a base for Octal, Barakat said, “Salalah has an excellent port, the most efficient in the region, and logistics are very important for a business such as ours. There is a growing need for APET sheet – the industry is growing at 10-12 per cent a year, as manufacturers abandon PVC, styrenic polymers for APET, which has a better clarity, gloss and mechanical toughness.”
Octal Petrochemicals has drawn from a large number of funding sources, including Oman-based investors and individual and institutional investors in Saudi Arabia, Kuwait and the US. Last month, Octal and BankMuscat agreed to a US$166.5 million loan facility, which completed Octal’s initial US$300 million investment in proprietary technology and custom-made production lines.