Engro Polymer to invest $23m in hydrogen peroxide business

Currently, local production does not satisfy demand due to which 10-15% is imported

KARACHI: Engro Polymer and Chemicals has announced plan to invest $23 million in order to enter the hydrogen-peroxide business.

According to Elixir Securities, the total domestic demand for hydrogen peroxide stands at 55,000-60,000 metric tons.

Although, Descon Oxygen Limited and Sitara Peroxide have an installed capacity of 30,000 metric tons each, the local production does not completely satisfy the demand, due to which around 10% to 15% of hydrogen peroxide is imported.

"We estimate Engro Polymer to set up a production capacity of up to 25,000 metric tons, which along with Descon's announced expansion will lead to surplus capacity in the country beyond 2020," stated the Elixir Securities report.

Currently, the company is using hydrogen as fuel that it derives from its caustic manufacturing process, which is not the best value created from the chemical element, added the report.



The company has, therefore, decided to diversify and enter the hydrogen peroxide business, along with a Greenfield manufacturing facility.

Engro Polymer was the second most traded stock during the day with almost eight million shares changing hands at the Pakistan Stock Exchange (PSX). The stock  price also increased 1.14% from Rs32.51 to Rs32.88 during the day.



Meanwhile, both Descon Oxygen Limited and Sitara Peroxide stocks hit lower locks during the day, with Elixir Securities citing Engro Polymer's entry into the business as the probable reason.

Published in The Express Tribune, September 8^th, 2018.

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