BMI View: The Philippines' development of olefins and polymer resins production will overcome the main weakness in its petrochemicals industry, which has been dependent on imported ethylene and propylene, as well as aromatics and their derivatives. JG Summit Holdings ' petrochemicals complex has only modest capacity but ensure s that the Philippine petrochemicals industry will have a future, with potential for further investment and diversification .
The petrochemicals industry witnessed a downturn in output revenue in Q116 with the value of basic chemicals output falling 15% y-o-y and rubber declining 11.6%, although plastics grew 1.3%. Much of this loss was due to a decline in prices. While chemicals output volume was up 83% y-o-y according to official statistics, it was down 43% compared to the previous quarter. Plastic and rubber volumes grew 14.3% y-o-y, indicating that output was holding up even as prices were falling.
JG Summit posted 38.1% growth in core net profit to PHP28.05bn in 2015 with its airline and petrochemical businesses contributing to its earnings. Consolidated revenues went up by 24.1% to PHP229.27bn while cash flow as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 29.6% to PHP63.79bn. New petrochemicals operations that opened in November 2014 ensured that the JG Summit Petrochemicals Group subsidiary reported PHP26.78bn in revenue, compared to PHP3.23bn in 2014.
We are forecasting real GDP growth to come in at 6.0% and 5.9% in 2016 and 2017 respectively. An important consumer of polymer piping and PVC products, the Philippines construction industry remains positive, and we forecast real growth of 7.5% and 8.9% in 2016 and 2017 respectively.
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. Robust domestic demand will bode well for production levels as vehicle demand increases, and we therefore forecast growth of 7.0% in 2016, with annual average growth of 6.6% over our forecast period 2016-2020. This is, however, lower than the 15% average growth forecast in our previous quarterly report.
The Philippines' Petrochemicals Risk/Reward Index is unchanged this quarter at 47.1. The country enjoys positive scores 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. It lies 4.0 points behind Indonesia and 14.3 points ahead of Vietnam.
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.