Boston, MA -- (ReleaseWire) -- 01/03/2014 -- The Vietnamese petrochemicals industry is set to experience a surge in capacity from 2018 due to the completion of two new complexes in Nghi Son and on Long Son Island and a potential mega-complex being developed by Thailand's PTT. BMI's latest Vietnam Petrochemicals Report states that these will transform Vietnam from a net importer of petrochemicals into a self-sufficient producer of basic chemicals with a long-term capacity for further downstream development and exports to the Asian market.
On the downside, the business environment has not been conducive to investment in petrochemicals with financing problems and land acquisition issues causing considerable delays. Vietnamese production will have to compete with imports from Singapore, Thailand and Malaysia, which are currently major suppliers of plastic resins to Vietnam. To be able to compete with these established players, the Vietnamese government will need to improve the country's infrastructure and streamline bureaucratic procedures for project approval.
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BMI has made the following revisions to its forecast:
- The Vietnamese petrochemicals industry is set to experience a surge of capacity from 2017/18 with the completion of two new complexes in Nghi Son and Long Son Island. These will turn Vietnam from being a net importer of petrochemicals to a self-sufficient producer of basic chemicals with a long-term capacity for further downstream development. On the basis of these projects, Vietnam is set for ethylene capacity of 1.4mntpa by 2018 with downstream operations including 970,000tpa PP and 800,000tpa PE.
- Aside from financing and land acquisition issues that have delayed refinery and petrochemicals projects in recent years, there is a danger of massive regional over-supply if all plants are built, including PTT's mega-complex, which will transform Vietnam into a regional petrochemicals exporter with 3.7mn tpa of aromatics and 6.5mn tpa olefins capacities from 2019. This would impact on petrochemicals profitability, which is already in decline. BMI cautions that plans may be scaled back if the projects lead to more output than the market can realistically absorb.
- With little current domestic petrochemicals activity, Vietnam scores poorly in BMI's Asia Petrochemicals risk/rewards ratings (RRRs). However, its position has improved since last year, with its score rising 0.5 points to 41.4 points, although it has fallen from 11th to 12th place as the Philippines has improved its position in recent quarters, now 0.9 points ahead of Vietnam. Vietnam's position has been enhanced by plans for additional highly integrated capacity and an improvement in long-term country risk, although it is still weighed down by poor institutional, financial and external risks.
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