Boston, MA -- (ReleaseWire) -- 02/14/2014 -- The over-supply situation in the Chinese market, coupled with growing Indian self-sufficiency and the ongoing eurozone crisis, will narrow the range of markets that are capable of absorbing Thai exports, according to BMI's latest Thailand Petrochemicals Report. As such, prices are likely to soften and margins will come under pressure. However, Thailand's major polymer exports are likely to account for up to a third of capacity by 2017.
Petrochemicals growth will benefit from operations at IRPC's expanded 395,000tpa monoethylene glycol (MEG) plant, which will feed the production of polyester fibres and resins. In terms of speciality chemicals, Mitsubishi Gas Chemical (MGC) is overseeing a major expansion of polyacetal engineering plastic capacity at Thai Polyacetal - with a de-bottlenecking programme raising capacity by 5,000tpa to 60,000tpa. A second phase involves the construction of a 40,000tpa polyacetal facility, which will raise the total at the site to 100,000tpa. Both projects were expected to come on stream by Q114. Polyacetal has a broad range of uses as a robust polymer used in engineering.
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Our key views are:
- Industry announcements suggest a moderate medium-term increase in petrochemicals capacities, including additional 100,000tpa of paraxylene (PX) and 90,000tpa ethylene oxide (EO) in 2015, followed by 60,000tpa linear-low density polyethylene (LLDPE) in 2016.
- In olefins, propylene capacity is set to rise 290,500tpa in 2015 and maintain this until the end of our forecast period in 2017. There is also potential for a 15-20% increase in PTTGC's polymer capacity, which could amount to an additional 250,000tpa by 2016, although the exact configuration had not been announced at the time of writing.
- PTTGC is reducing its exposure to the crude oil market by reducing the proportion of naphtha used in its total feed from 15% to 6-7%, as a result of greater ethane use - a move that should boost its competitiveness.
- In terms of the local market, we anticipate strong demand in the construction sector going forwards; however, the level of growth is set to decline from an estimated 5.2% in 2013 to 4.5% in 2014. The combined domestic consumption of the five polymers is forecast to rise substantially over our five-year forecast period, with exports playing the most vital role in the industry in the years to come. In 2013, the outlook for petrochemicals exports was slightly negative, but Thai production will remain competitive on the regional market and should bounce back in 2014.
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