Thailand's chemicals trade balance is going further into deficit as the petrochemicals sector struggles with competitiveness. The decline in the cost of naphtha has disadvantaged local producers reliant on ethane feedstock. With plans for greater naphtha use from existing refineries and downstream diversification, Thailand is attempting to address the problems and support future growth while defending margins.
In the first seven months of 2016, the chemicals trade deficit totalled THB43.1nn, representing a rise of 35% y-o-y with exports falling 2.3% y-o-y to THB440.2bn and imports rising 0.4% to THB443.3bn.
Naphtha-polyolefins spreads are likely to remain strong in 2016, even as new capacity comes onstream. However, this will have a mixed impact on Thai producers. Thailand's naphtha-based petrochemicals production will benefit from lower oil prices, but gas producers will see margins squeezed. The price movements affected Thai producers in different ways in 2015 with Siam Cement Group (SCG), the largest naphtha-based producer, reporting an improvement in chemical margins while gas-based producer PTTGC saw earnings drop.
Margins will influence the competitiveness of Thai producers, who are increasingly reliant on external markets. We expect cooling regional demand stemming from a broad economic slowdown in the region - particularly in China and Japan, which are Thailand's largest and fourth largest export destinations - to persist. In the first four months of 2016, the chemicals trade deficit totalled THB6.4trn. This represented a decline of 14.9% y-o-y with exports declining 1.1% y-o-y to THB53.5trn while imports fell 2.1% to THB59.9trn.
PTT Global Chemical Public Company (PTTGC) is planning to add capacities of 500,000 tonnes per annum (tpa) of ethylene, 261,000tpa of propylene and 100,000tpa of C4, including butadiene from 2020, utilising 1.5mn tpa of naphtha from its refineries that is currently utilised by SCG. It is also set to double the company's linear low density polyethylene (LLDPE) production capacity to 800,000tpa from 2018.
At PTTGC's Map Ta Phut complex it is expanding aromatics production from 2.26mn tpa to 2.42mn tpa as well as planning projects for 12,000tpa of hexamethylene diisocyanate and 405,000tpa of phenol.
SCG announced will boost its overall low density polyethylene (LDPE) production capacity by 60,000tpa by 2016. Plans for a USD1bn polyurethane (PU) complex in Rayong include capacities of 200,000tpa propylene oxide and 130,000tpa polyether polyols.
Adding value will be crucial to advancing the value of Thai petrochemicals and securing the value chain in order to support downstream end-use industries. IRPC is looking into producing high rubber polypropylene (PP) for the automotive sector with a new unit expected to come online by end-2017.
In BMI's Asia Pacific Petrochemicals Risk/Reward Index, Thailand's score has been revised downwards by 0.4 points to 68.5 points due to a decline in market and country risk scores. Country risk has suffered due to a worsening external environment, while market risk has suffered from the declining competitiveness of the country's petrochemicals industry. However, it retains its sixth place, behind Taiwan and ahead of India.
The Thailand 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 Thailand Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Thai petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Thai petrochemicals market.
- Target business opportunities and risks in the Thai petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Thailand.
- 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.