New Market Report: Philippines Petrochemicals Report Q3 2013

The Philippines' petrochemicals market continues to grow at a strong rate, assisted by economic growth and domestic consumption. However, this is likely to benefit imported petrochemicals which, in spite of planned expansion in the petrochemicals sector, will continue to grow as a proportion of total domestic sales over the long term.

In 2012, the Philippines' value of production index (VaPI) rose just 0.3%, while the value of plastics production surged 10.6%. However, the value of rubber production plunged 9.6%. In terms of production volume, chemicals output was up 2.0%, plastics was up 9.9% and rubber was up 1.2%. A downturn in external markets, coupled with a strong peso, militated against growth in domestic chemicals production, although the plastics sector was able to buck the trend. In the first four months of 2013, however, chemicals performed strongly, with VaPI up 26.7% year-on-year, although plastic and rubber contracted 2.6% and 19.5% respectively. While rubber volumes remained disappointing over the period, plastic output also shrank, suggesting that reduced production had helped tighten the market sufficiently to raise prices with a knock-on positive effect on the value of production.

Full Report Details at
- http://www.fastmr.com/prod/664925_philippines_petrochemicals_report_q3_2013.aspx?afid=301

Key developments in the sector include:

* Greater competition with foreign resins producers, as a result of trade liberalisation, could hamper the recovery in output for upstream petrochemicals producers. However, the development of dynamic and growing local petrochemicals-consuming industries can only improve the business environment for the industry over the long term, with the potential for increased investment in capacity.
* JG Summit Petrochemical is building the country's first naphtha cracker plant - with 320,000tpa ethylene capacity - which is set to open from September 2013. The development of olefins sources will overcome the main weakness in the Philippines' petrochemicals industry, which is dependent on imported ethylene and propylene, as well as aromatics and their derivatives.
* In BMI's Asia Petrochemicals Risk/Reward Ratings (RRRs), the Philippines ranks 11th out of 12 countries, scoring 42.2 points. An improvement in its Country Risk score is tempered by the effects of a delay in the completion of the country's first ethylene unit.

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