LANGUAGE:
Thailand Board of Investment North America
ABOUT US | CONTACT US | BLOG SEARCH:  BlogBlog
 
THAILAND'S PETROCHEMICAL INDUSTRY SHIFTING TO HIGH VALUE-ADDED PRODUCTION


(Source: Thailand Investment Review, May 2017)

The volatility in oil prices is back in the spotlight. Mr. Clement Choo, the editor for petrochemicals with Platts, the London-based provider of energy and petrochemical information, said that increases in petrochemical prices were capped by market concerns about oversupply and poor demand. Ethylene faces an oversupply as healthy production margins are allowing cracker operators to run the plants at full capacity whereas olefins production is expected to remain thin when steam cracker turnarounds take place.

As a result, the prices of several key petrochemical products in Asia hit their lowest levels in years. Among them was ethylene which hovered at six-year lows, said Mr. Choo. 
OPEC and non-OPEC oil producers shrank their production levels to 94% in February 2017. OPEC produced 32 million barrels per day, a 3% decrease from December 2016. 
However, despite the decrease in production levels, in the second quarter of 2017, the market is expected to have an over-supply of 400,000 barrels of crude oil per day, pushing prices lower, according to Thailand’s Environmental Impact Evaluation Bureau. 
The Platts Global Petrochemical Index (PGPI) indicated that monthly average petrochemical prices fell USD 9 per ton from June to USD 1,013. The last time global petrochemical prices declined on a monthly basis was in January this year when they dipped 14% to USD 850. The monthly PGPI is a benchmark basket of seven widely used petrochemicals including olefins, ethylene, propylene and praxylene. 
The slide in oil prices has brought down the cost of naphtha, a feedstock needed for petrochemicals that are used to make plastics, rubber, nylon and other cosmetics products.
Asia-Pacific – the world’s largest market for petrochemicals
China is the largest petrochemicals consumer in Asia and the third largest globally, accounting for one-quarter of global consumption. KPMG has estimated that consumption in China rose by about 10% a year over the past decade on the back of demand for Chinese manufactured goods. Industry players are now observing a slower increase in petrochemical product imports by the country.
Today, the Asia-Pacific represents about half of the volume consumed globally. According to KPMG, over the next decade, the Asia-Pacific is expected to drive two-thirds of global petrochemical demand. This can be attributed to the rapid modernization taking place in the region, the large demographic changes underway, robust economic growth and escalating domestic consumption.
Strengthening Thailand’s innovation-based economy
ASEAN countries have continued to develop their petrochemical sectors, yet Thailand and Singapore are at the forefront of the industry and Thailand remains well ahead of its regional rival.
Today, Thailand’s petrochemical industry has an annual capacity of 30 million tons, the second largest in Southeast Asia and the 16th largest in the world.
Thailand is home to a strong downstream industrial sector, exporting more than 40% of major polymers to international markets. The expansion is supported by significant growth in the automotive, packaging, electrical
and electronics, construction and agricultural industries.
Owing to the fluctuation in oil prices in recent years, Thailand has aggressively increased its high value-added petrochemicals products, which has helped cushion the impact of fluctuating prices.
The third wave in petrochemical growth
The country is currently in the third wave of its development plan for petrochemical growth (2004-2018) with an increasing focus on competitiveness, asset integration and strategic alliances for growth and value-added. The petrochemical plan forecasts considerable growth and opportunities for investors in petrochemical products with a combined capacity of 10 million tons per annum and increases in research and development for further product development, according to the BOI. 
Thailand’s petrochemical industry is in a transition to effectively adapt to a new era of intense global competition in which leadership in environmental initiatives and sustainability could be important factors in growth for the industry.



 
© 2013 The Board of Investment of Thailand. All rights reserved.