According to a new report from BMI, the Vietnamese petrochemicals industry is set to experience a surge in capacity from 2018 due to the completion of two new complexes in Nghi Son and on Long Son island as well as the potential of a mega complex being built by PTT of Thailand. BMI believe that these projects will transform Vietnam from a net importer of petrochemicals into a self sufficient producer of basic chemicals with a long term capacity for further downstream development and exports to the greater Asian market.
The business market
However, not all that BMI has reported has been positive. The business environment has not been conducive to investment in petrochemicals recently with finance problems and land acquisition issues being the main cause of project delays. Vietnamese production will have to compete with Singaporean imports, as well as products from Thailand and Malaysia which are currently major suppliers of plastic resins to Vietnam. To ensure Vietnam stays competitive, the government is going to have to improve the country’s infrastructure and streamline bureaucratic procedures for project approval, according to the report.
BMI expect the Vietnamese petrochemicals industry to experience a surge in capacity between 2017 and 2018 when the Nghi Son and Long Son Island facilities are complete. Vietnam is likely to move from a net importer of petrochemicals to a self sufficient producer of basic chemicals with a long term capacity for further downstream development. By 2018, the country is set for 1.4 million tpa ethylene capacity.
Other than finance and land acquisitions that have delayed petrochemical projects recently, there is the danger of over supply regionally if all proposed plants are built. This includes the construction of the PTT mega complex which will turn Vietnam in to a regional petrochemicals exporter with 3.7 million tpa of aromatics and 6.5 million tpa of olefins capacity, both by 2019. This would heavily impact on petrochemical profitability which is already taking a hit.
Adapted from a press release by Claira Lloyd.
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