Growing flood concerns dampen demand in Thailand

Thailand is facing its worst floods in 50 years, as per ChemOrbis. Floods have affected much of the country’s north, northeast and central regions. While the death toll is already high and the estimated cost of the damage for the nationwide flooding continues to grow, the government is now trying to prevent flood waters from reaching Bangkok by building floodwalls on the outskirts of the capital city. At least 281 people have been killed by heavy monsoon rain, floods and mudslides since late July and 26 of Thailand's 77 provinces are inundated, according to the Department of Disaster Prevention and Mitigation. Bank of Thailand Governor also said a preliminary estimate by the central bank shows economic losses from flooding that began in late July range from baht 60 billion to baht 80 billion (US$1.9-2.6 bln). That figure doesn't include damages to assets or reconstruction costs and is expected to rise as the flood waters surge toward Bangkok, a city of about 10 million people. In addition, the Finance Ministry has cut its economic growth forecast for this year to 3.7% from 4% percent because of the damage to farming and the disruption to industry. Honda, Toyota, Pioneer, Nikon, Toshiba, Sony, Mitsubishi, Hitachi and ON Semiconductor Corp are amongst the companies suspending their operations in the country, according to Bloomberg. Even though the country’s petrochemical operations are unaffected by the recent disasters, polymer demand from many end product markets has been hampered further. Manufacturers in numerous end product applications including the agricultural sector as well as the automotive and electronics sectors, where the impacts of the damages are seen the most, are now holding pessimistic views for the near term. They do not think that their business will improve soon. A pipe manufacturer in Hatyai said that their end product market is quite slow due to the ongoing impacts of the floods in Central Thailand, which will eventually pass to the south of the country by next month. He is not too hopeful about his November business while he may buy some cargoes only by the end of the year, he commented. Two PVC producers in Thailand, who concluded local sales with decreases, are also pessimistic about seeing a demand recovery by November. A distributor in Bangkok stated that they have cut their PS and ABS offers further to the local market this week; however, he is not sure if he can make sales even at lower levels due to poor demand, as per the plastics pricing service ChemOrbis. He was planning to buy some cargoes for stocking purposes; however, he decided not to do so because of the concerns that the floods may reach Bangkok in two days, where his warehouse is located. Another distributor reselling PP and PE mostly at lower levels commented that demand has deteriorated now that the worries about the recent floods are growing. He is not optimistic that the market will improve until next month.