Petrochemicals production set to fall by 15-20% in Thailand in 2009, to make quick recovery in 2010

Thailand petrochemicals production is set to fall by 15-20% in 2009, but will make a quick recovery in 2010 when new capacity comes onstream, according to the latest Thailand Petrochemicals Report on Companiesandmarkets.com. A number of new projects are nearing completion. PTT Chemical (PTTCH) is leading expansion efforts, with PTT Polyethylene (PTTPE) – a joint venture (JV) between PTT Chemical and PTT Plc – awarding a construction contract to Toyo Engineering Corp in mid-2006 to build a US$1.7 bln ethane cracker situated in Mab Ta Phut with a capacity of 1 mln tpa. Construction on the cracker and an integrated PE unit started in May 2007 and is slated for completion in 2010. The cracker will feed a 350,000 tpa linear low density polyethylene (LLDPE) plant and a 300,000 tpa low density polyethylene (LDPE) plant, as well as the production of ethylene vinyl acetate copolymer. However, the economic downturn is having an impact on some projects that have yet to be started. IRPC has announced that due to the economic slowdown it was delaying the expansion of its refinery from 215,000 tpa to 258,000 tpa as well as an expansion of its acrylonitrile butadiene styrene (ABS) unit from 117,000 tpa to 200,000 tpa. The US$158 mln project was due to be completed by 2011 and would meet an expected rise in demand from the automotive and electrical appliance industries. IRPC did not specify for how long the expansion had been delayed. Based on capacity utilisation trends in H1-09 and a forecast 10.1% drop in overall manufacturing output, the report forecasts a 15-20% yoy decline in petrochemicals consumption and production volumes for olefins and polyolefins in 2009, despite the petrochemicals industry being one of the main beneficiaries of the government’s injection of THB1.52 trn (US$44 bln) 3 year investment program in infrastructural developments. However, with the worst of the recession likely to have been passed in Q2-09, the industry could see an upturn as early as Q4-09. The situation is not helped by the appreciation of the baht, which is harming exports of petrochemicals and manufactured goods with a high level of petrochemicals use; the report forecasts a 15% drop in total exports in 2009, while the Ministry of Commerce predicts a decline in the region of 15-19%. It is believed that any stabilisation in the petrochemicals industry will first be felt in sectors such as PVC and products with industrial applications. Mab Ta Phut will remain the focus of petrochemicals developments. PTTCH is expected to start up its new 1 mln tpa ethane cracker in September. Its new 400,000 tpa LLDPE is due to start trial production in August-September 2009 and its new 300,000 tpa LDPE plant will come on stream in February-March 2010. The growth in cracker capacity will help supply feedstock to downstream plants, although planned capacity expansion will also be delayed. Compared to 2008 levels, ethylene capacity in 2013 will be up 75% to 4.23 mln tpa with an 80% increase in PE capacity to 3.96 mln tpa and a 52% increase in PP to 2.05 mln tpa.