BMI View: JG Summit's new petrochemicals facilities led to strong growth in chemicals output and the value of production in 2015, but the plastics sector saw weaker growth and rubber production contracted. Nevertheless, the firm has become more profitable . Additionally, t he outlook for the sector is improving , and t he domestic market benefits from strong growth in end-markets.
In 2015, the value of basic chemicals output soared 31.9%, principally on the back of the new cracker operated by JG Summit Petrochemicals, which has capacities of 320,000 tonnes per annum (tpa) of ethylene and 189,000tpa propylene and feeds a 185,000tpa polypropylene (PP) plant and a 300,000tpa polyethylene (PE) plant. It also produces 218,000tpa of pyrolysis (biomass) gasoline, 150,000tpa of fuel gas and 28,000tpa of fuel oil. With the cracker ramping up production, chemicals output grew 8.8% in 2015. In spite of the increase in feedstock to the associated polymer units, the value of production of plastic products in 2015 declined 0.6%year-on-year ( y-o-y), although volumes rose 7.1%. Meanwhile, rubber output fell 0.3% and he value of output declined 3.4%.
The Bataan Refinery upgrade 2 project also came into full operation in Q215 with a new fluid catalytic cracker unit, which has a propylene production capacity of 250,000tpa. The project will also produce other by-products, such as petrochemicals feedstock (particularly propylene) which is to be sold to plastic producers. As a result, propylene production will grow by 200% within a year of operation.
JG Summit grew its net profit in the first nine months by 2.6% y-o-y to PHP16.11bn as treasury losses curbed core earnings. Excluding nonrecurring items, JG Summit's nine-month net profit rose by 39.2% y-o-y to PHP20.69bn on the back of the double-digit expansion in contribution from core units, including its petrochemical business which turned profitable after many years of losses.
Polyvinyl chloride (PVC) will be among those segments that will benefit from growth in the construction sector. We maintain our positive outlook on the residential and non-residential construction sector and forecast real growth of 8.4% in 2016 and 8.6% in 2017, which will provide significant support to growth in polymers as well as hold up prices.
The automotive industry will emerge as a key consumer of petrochemicals products, but this is unlikely to have a significant role in the petrochemicals market in 2016. Vehicle production is forecasted to grow 15% in 2016, an upward revision from 11.7% forecast in the previous quarterly report, and average growth of 15% over our forecast period to 2019.
The Philippines' Petrochemicals Risk/Reward Index rose by 0.2 points this quarter to 47.1 as a result of improved country risk ratings. The country enjoys positive ratings for market risk and recent growth in capacity has bolstered its potential for further downstream diversification. The Philippines has a supportive business environment in which the petrochemicals industry can grow.
The Philippines Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Philippines Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Philippine petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Philippine petrochemicals market.
- Target business opportunities and risks in the Philippine petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Philippines.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.