Asian energy companies boosting petrochemical outputs

Demand for petrochemical products is growing solidly in China, despite turmoil in markets for steel and other materials due to China's supply glut, as per Nikkei Asian Review. Chinese and Southeast Asian energy companies are rushing to expand their production facilities to meet rising demand in the coming years, particularly in emerging markets. Thailand's energy giant PTT group operates a total of about 20 oil plants in Map Ta Phut, Rayong Province, about 200km southeast of Bangkok. The public company has been running its ethylene plant at full capacity over the past two years. Ethylene is a basic petrochemical product. Amid strong demand for the product, the company will decide whether to build a new production plant by year's end, said Patipan Sukondhaman, chief operation officer in charge of PTT Global Chemical's downstream petrochemical business. He estimates the new plant will have a capacity of about 500,000 tpa. Meanwhile, SCG Chemicals, a group company of Thailand's largest industrial conglomerate Siam Cement Group, has joined hands with the state-run oil company PetroVietnam in a US$4 bln project to build a large industrial complex in the country's southern Long Son Island, including an ethylene manufacturing facility with an annual output of about 1 mln tons. In addition, PetroVietnam is working with a consortium of companies, such as Japanese oil company Idemitsu Kosan and Kuwait Petroleum International, to complete construction of a comprehensive petrochemical facility, including an oil refinery. The plant is scheduled to open in 2017, as per asia.nikkei.com. In Indonesia, the state-run energy company Pertamina and other businesses are also considering plans to build new production facilities. In June last year, Japan's Ministry of Economy, Trade and Industry released its forecast of global supply and demand trends for petrochemical products. According to this survey, in the Association of Southeast Asian Nations countries, production of ethylene-derived products is projected to increase by 10% to 11 million tons in 2019 compared with the 2013 level. Demand will likely rise by over 20% to 8.4 million tons in 2019 from the level in 2013. Overall, the production volume of petrochemicals is expected to jump 40% to 57.8 mln tons in 2019 from the level in 2013 in Asia, excluding Japan, due to an increase in production facilities by Chinese and Southeast Asian energy companies. Even so, greater use of petrochemicals in automobiles, construction, packaging and other materials will likely push up demand considerably to 69.1 million tons in 2019, far surpassing the expected production volume. As such, many industry analysts believe the supply-demand trend will not change very much in Asia, even if economic slowdown forces Chinese and Asian energy companies to push back their new facility construction later than initially planned. Meanwhile, leading Chinese energy companies, such as China National Offshore Oil Corp. and China Petrochemical Corp. (Sinopec), plan to construct new facilities with outputs of 800,000 tons to 1 mln tpa. The production volume of ethylene-derived products is estimated to grow to 27.1 mln tons in 2019, an increase of about 10 million tons from 2013, according to the survey. However, the output of petrochemicals is not likely to grow as fast as that of steel products in the 2000s in China. Back then, the production of steel products saw a fivefold increase in just 10 years. Slower growth can be attributed in part to Chinese government policy. Beijing focuses more on new facilities using rich coal reserves from inland areas, while reining in large production facilities in the coastal region that rely on imported materials. Even so, more petrochemical products made of lower-priced materials are expected to flow into Asia from the Middle East and the U.S. amid China's strong demand. Asian energy companies will need to prepare for this growing influx as well. Formosa Plastics Group of Taiwan, for instance, is building its third ethylene production facility in the U.S. state of Texas, with a view toward launching a fourth one in the state of Louisiana. The company awaiting official approval from the local authority. Formosa Petrochemical President Tsao Mihn said on Monday that the company is building a plant with a U.S. business in Taiwan's central western Yunlin County to produce medical-use catheter and high-function rubber used in baby's bottles. The plant will start output on a trial basis in August, he said. "We will make highly value-added products to boost our competitiveness," Tsao said. Singapore, meanwhile, has been a leader in Southeast Asia's petrochemical market. The Polyolefin Company (Singapore) -- a joint venture comprising Japan's Sumitomo Chemical, Royal Dutch Shell and other businesses -- will ramp up production in August of petrochemicals suited for use in transfusion bottles and other products. "We will raise the ratio of highly value-added products to over 80% from the current 70%," said a company official