According to a new report from BMI, the Indonesian petrochemicals market in 2013 was a little less bullish than expected in the previous quarter with real GDP growth forecast for the year revised down from 5.8% to 5.7%. BMI’s new report maintains expectations for the rate of economic expansion to ease further to 5.4% this year. The trends suggest slightly less dynamism over the short term, but the market remains robust and the long term scenario is strongly to the upside. The local industry’s inability to meet domestic requirements means that the country will remain a significant net importer of petrochemicals products in Asia.
A joint venture between PTT Global Chemical (PTTGC) and Pertamina to set up a fully integrated petrochemical complex should commence commercial operations in 2018. The project is expected to include a 1 million tpy naphtha cracker with downstream capacities of 400 000 tpy of polyethylene, 350 000 tpy of polypropylene and 200 000 tpy of PVC, which means margins will be closely related to crude prices. The impact of ethane based US petrochemicals on the Asian market may make the project uneconomic.
Key sector views
- No cracker turnarounds scheduled in 2014 at Chadra Asri. Plant operating at 95 – 100% capacity in Q1.
- In the construction sector, there is limited scope for growth in 2014 to out perform its 2012 level. The downside risks, namely a deepening deficit, higher borrowing costs, declining purchasing power for companies, the 2014 elections and bottlenecks in product execution, are manifesting and are set to adversely affect near term construction activity. 2014 construction growth forecast at 6.3%.
- One of the main drivers of petrochemicals market growth will be the country’s automotive industry, which is spurring investment in rubber, polyurethanes and engineering plastics.
Adapted from a press release by Claira Lloyd
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