Boston, MA -- (ReleaseWire) -- 05/02/2014 -- The Thai petrochemicals industry is now looking to add value to basic chemicals production following a surge in olefins and polymers capacities over recent years. We examine ongoing projects and assess the short-term and long-term risks as Asia struggles with over-supply and a volatile.
Thailand's petrochemicals industry has made rapid progress. The policy of free competition in the industry has led to an increase in investment, as well as production capacity. Established manufacturing groups have focused on building a completely integrated industry and expanding investment opportunities to a global scale.
In 2014, the Thai petrochemicals industry is set to continue ongoing expansion plans, led by PTTGC. The company's exposure to high oil prices has been reduced with the recent reduction of the proportion of naphtha at its 515,000tpa I-4 cracker No.1 from 95% to 50% and utilising natural gas instead. The move will reduce the proportion of naphtha in PTTGC's total feed from 15% to 6-7%, thereby boosting the overall competitiveness of Thailand's petrochemicals industry. In 2014, PTTGC will commission a new plant with 75,000 tonnes per annum (tpa) of butadiene and 25,000tpa of butane.
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Thailand's petrochemicals producers have been operating close to capacity in recent months, indicating that 2014 will see a robust performance for the sector, apart from a five-week scheduled turnaround at a 460,000tpa cracker at Map Ta Phut in Q114 and temporary closures of polyethylene (PE) plants at the site due to a power outage. IRPC is planning to produce more pipe grade HDPE at Map Ta Phut in 2014 by converting an 80,000tpa HDPE plant at the site from film and injection grades to make black compounded HDPE 100 pipe grade resin.
- 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. 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 2018.
- The domestic petrochemicals market is likely to remain somewhat subdued over the coming year as Thailand's amid a decline in automotive production and the poor performance of the construction sector. While the two most significant sectors are subdued, the rest of Thailand's industrial sector should post growth of 4.0-5.5% annually over the next five years. This should help stimulate petrochemicals consumption more broadly. The combined domestic consumption of the five polymers is forecast to rise substantially over our forecast period (2014-2018); however, for the Thai industry, the most crucial factor will be exports.
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