The Singaporean petrochemicals industry is set to witness a massive increase in capacities in 2010 and 2011, but over-supply in the Chinese market may put pressure on margins and sales in the near term, according to a report by Business Monitor International (BMI).
In 2009, Singapore had olefins production capacities of 1.99 mln tpa ethylene, 990,000 tpa propylene and 60,000 tpa butadiene. These fed downstream units with combined capacities of 820,000 tpa benzene, 360,000 tpa ethylbenzene, 245,000 tpa ethylene oxide, 125,000 tpa ethylene glycol, 95,000 tpa styrene monomer and 990,000 tpa xylenes. In the resins segment, Singapore had capacities of 390,000 tpa high density polyethylene (HDPE), 250,000 tpa low density polyethylene (LDPE), 525,000 tpa linear low density polyethylene (LLDPE), 875,000 tpa polypropylene (PP), 95,000 tpa polystyrene (PS) and 30,000 tpa polyvinyl chloride (PVC).
New petrochemicals capacity in Singapore will be focused on serving the Chinese market, concentrating on the key growth areas of aromatics, mono-ethylene glycol (MEG), LLDPE and PP. Three sites will form the basis of the expansion of Singapore's petrochemical industry over the next five years: the Shell Eastern Petrochemical Complex on Bukom, the ExxonMobil Chemical complex on Jurong and the Jurong Aromatics complex. Together, these will add capacities of 1.8 mln tpa of ethylene, 950,000 tpa of propylene, 155,000 tpa butadiene, 480,000 tpa of PE, 450,000 tpa of PP, 570,000 tpa of benzene and 1 mln tpa of xylenes. By 2014, Singapore's ethylene capacity will have nearly doubled to 4.04 mln tpa, PE capacity will be up 40% to 1.65 mln tpa and PP capacity will be up 50% to 1.33 mln tpa. With the Chinese petrochemicals industry set to witness major expansion amid slower rates of demand growth, the report cautions that the Chinese market will witness surpluses in some segments that could undermine prices and hit margins at Singaporean facilities. However, Singapore will become a highly competitive, large-scale petrochemicals centre - perhaps the 10th largest in the world by the next decade. Furthermore, economies of scale should help Singapore become the price leader in Asia's olefin market, and have a strong presence in the general purpose resin market. The global economic downturn had a negative impact on some petrochemicals projects in Singapore. Lanxess postponed the construction of a 100,000 tpa butyl rubber facility to 2014 due to a fall in demand. Meanwhile, the Jurong Aromatics Corporation's (JAC) massive aromatics project in Singapore is also facing severe delays. It was due to be completed in 2011, but the report believes it will not come on stream until early 2013. The complex will use UOP technology to produce 800,000 tpa of paraxylene (PX), 200,000 tpa of orthoxylene (OX) and 450,000 tpa of benzene.
Singapore comes fourth in the Petrochemicals Business Environment Rankings for Asia, with 75.0 points, down 0.7 points since the previous quarter due to project delays, although this has been partly mitigated by an improvement in the country's long-term external risk rating. This places it 1.6 points behind South Korea and 0.6 points ahead of China. Despite the country's small size, it has a positive risk environment, reliable infrastructure, and a large, integrated and growing petrochemical industry.