At a time when uncertainty over the global economy and oil prices continues to deepen, a new petrochemical trading company has taken the bold step to set up shop here.
Afco Energy, which trades physical energy products such as fuel oil, petrol, jet fuel and liquid petroleum gas, opens its new unit, Afco Petrochemicals, today.
The company in Battery Road is staffed by three traders who will specialise in the trading and risk management of petrochemical products and derivatives, including paraxylene and benzene.
Paraxylene goes into the making of plastic bottles, polyester, yarns, fibres and films, while benzene is used to make styrofoam and rubber products.
Managing director Lim Fang Wei is unfazed by the slowdown in demand worldwide.
"Demand for petrochemicals has come off, but we still need to eat, we still need to consume, and personal consumption drives the demand for petrochemicals," he told The Straits Times last Friday.
"Consumption for petrochemicals will keep pace, though at a slower rate, but there will still be growth," he said, citing opportunities in China, India, the Middle East and some parts of South-east Asia.
Mr Lim noted that the decline in oil prices has also translated into lower raw material cost for petrochemical producers and allowed them to maintain their margins, even though many companies were caught off guard when crude prices started sliding in June 2014.
"We believe that as competent traders, we should be able to take advantage of the market, whether it's in a cyclical upturn or downturn," he said.
"In these trying times, our customers need a steady hand. In fact, this is the best opportunity for us to assist our customers and guide them."
Mr Ali Nael, managing director of parent company Afco Energy, the global trading subsidiary of Dutch oil company FinCo Fuel Holdings, said in a statement: "We want to take advantage of the market inefficiencies resulting from the consolidation of the energy industry and flux in the restructuring of national economies.
"Such broad changes will open the doors for Afco Petrochemicals which, though newly set up, is managed by experienced traders widely respected in the petrochemical industry."
Mr Lim said that the company aims to "eventually go global".
"There are arbitrage opportunities in different regions across the world, and you need to have warm bodies to take advantage of those opportunities," he noted.
"But our focus for now is to start small and dig deep."