JG Summit's naphtha cracker in Phillipines not viable?

14-Feb-05
In view of the small size of the Philippine market of 300,000 metric tons, local plastic producers are doubting the viability of the US$300-million naphtha cracker plant being proposed by JG Summit Petrochemicals Corp. (JGSPC), as the size of the Philippine market is too small to justify a naphtha cracker. JGSPC, a joint venture between taipan John Gokongwei Jr. and Marubeni Corp. of Japan, had revived plans of the country’s first ever naphtha cracker, scheduled to start commercial operations by H1-2008 with a capacity of 350,000 metric tons. MAny feel that the proposed naphtha cracker of JGSPC would only serve the ethylene requirements of its US$350 million polyethylene and polypropylene plants in Batangas, established in 1998. However, many feel the naphtha cracker has always been their excuse to seek tariff protection by JGSPC. JGSPC is currently the remaining major producer of polymers or resins used by f the local downstream plastic producers. However, it has not been operating at 100% production capacity despite the continued tariff protection. The state-run Philippine National Oil Co. (PNOC) has decided to defer its proposed naphtha cracker plant inside the Bataan Petrochemical Complex to 2009 when the size of the market is expected to reach one million metric tons. PNOC has also decided to raise the plant’s capacity to 1.2 million metric tons instead of 600,000 metric tons in order to strengthen players in the midstream petrochem industry. In order to be competitive, existing naphtha cracker facilities with a capacity of 600,000 metric tons are currently being upgraded to one million tons. In general, the global size of a naphtha cracker plant is a minimum of one million metric tons of ethylene capacity. However, the size of the Philippine market is too small to justify a naphtha cracker, demand is barely half of the crackers' ethylene capacity anad the ethylene will not be absorbed by the market.
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