According to BMI, the Chinese petrochemicals industry is set for solid growth in output, but it will be constrained by a slower pace of domestic demand for goods. BMI has also predicted that exports will take a lead, but some segments will suffer over capacity and downstream operations are set to see some closures to adjust supply to demand.
Recently, the petrochemicals industry in China has seen a slowdown in olefins but plastics and rubber have seen growth. In the first quarter of this year, BMI reported that ethylene production grew 5.6% year on year. Plastics and rubber production rose 10.2%.
Even though there is a slowdown in the country’s manufacturing sector, the automotive sector, which BMI reports as the main petrochemical consuming industry, is set for 9.2% growth this year. The construction industry is also reportedly seeing a slow down in growth rates this year.
BMI has reported that although the new Indian government has pledged to reform the business environment, the impact on the petrochemicals industry will not be immediate. BMI does however anticipate stronger market growth from H214, coinciding with the completion of many overdue projects. BMI believe that the main challenge to face India’s petrochemicals sector will be institutional weakness. High barriers to entry, the pervasiveness of corruption, excessive red tape and the slow pace of project execution are all listed as major obstacles to the industry in the medium term.
BMI believe that over the short term, the situation will be difficult for domestic producers, although they will be protected to some extent from competitions from petrochemicals imports which will be moderate. The growth in the sector is expected to be achieved through increasing domestic capacities. The domestic consumption of petrochemicals is expected to follow trends in the wider economy and BMI believe the recent positive policy changes and weak base effect should see growth reaccelerate in the coming year.
BMI has said that the start of operations at the JG Summit’s cracker project in the second quarter of this year will integrate downstream polymers production with a domestic feedstock source, which will enable the Philippines’ petrochemical industry to become more competitive in the market place. The new cracker will produce 320 000 tpy of ethylene, 189 000 tpy of propylene and 218 000 tpy of pyrolysis gasoline along with 150 000 tpy of fuel gas and 28 000 tpy of fuel oil. The products from the new cracker will be transferred to JGSPC’s polyethylene and polypropylene plants and the pyrolysis gasoline will be exported.
Elsewhere, Petron is carrying out an upgrade to its refinery to include an FCC unit with polypropylene production at a capacity of 250 000 tpy. The production of speciality chemicals and polypropylene is expected to grow as Petron sets up other petrochemical plants across the country.
BMI forecasts real GDP growth of 6.3% for the Philippines this year, as the company expects domestic demand to remain strong and export sector growth to see a modest rebound. BMI has said that it is optimistic about growth, but the company remains wary of any renewed global volatility that will pose downside risks to the growth forecast. BMI still see the automotive market as one of the key consumers of petrochemical products in the Philippines.
Adapted for web by Claira Lloyd
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