Philippines petrochemicals market to grow with growth of automotive and construction sector

31-Oct-13

The Philippines' petrochemicals market continues to grow at a strong rate, assisted by economic growth and domestic consumption. However, this is likely to benefit imported petrochemicals which, in spite of planned expansion in the petrochemicals sector, will continue to grow as a proportion of total domestic sales over the long term, as per Business Monitor International. Key developments in the sector include: * The opening of JG Summit Petrochemical's planned cracker project - the country's first - has been delayed yet again to Q1-14, which will ensure that downstream output growth will remain constrained until 2014. The cracker will have 320,000 tpa ethylene production capacity. The development of olefins sources will overcome the main weakness in the Philippines' petrochemicals industry, which is dependent on imported ethylene and propylene, as well as aromatics and their derivatives. * One of the key consumers of petrochemicals products is the automotive industry, which is set for strong growth. BMI has upgraded its forecast to an annual average growth of 12% over the 2013-2017 period, to hit 100,000 units by 2017. This should stimulate growth in consumption of engineering plastics and rubber. * Polyvinyl chloride (PVC) will be among those segments that will benefit from growth in the construction sector, which is starting to ignite private sector interest and could reach full-swing in 2013. Real growth in the Philippine construction sector is forecast to reach 8.1% in 2013 and 7.3% in 2014. * The weak spot will be in the retail sector, which contributes to the consumption of plastic end-products, particularly PE film and blow-moulded polymer products used in packaging. Retail sales are set to shrink in the medium-term, undermining growth in these polymer segments.