New Market Report: Thailand Petrochemicals Report Q2 2016

Thailand's petrochemicals industry is expanding downstream capacities, while diversifying feedstocks, in order to shore up margins and add value to output. It will need to maintain competitiveness through feedstock flexibility and product diversification in order to reverse the emergence of a trade deficit in chemicals.

Export performance will be an overwhelming concern for Thai petrochemicals. In 2015, Thailand reported a chemicals trade deficit of THB39.6bn, compared to a surplus of THB30.7bn in 2014, as the price of chemical exports fell amid softening demand and lower feedstock costs. The value of exports declined 12% to THB700.4bn, which was a higher rate of decline than the 3.3% fall in imports to THB739.9bn.

Regional demand growth will remain subdued due to a broad economic slowdown. This in turn will have a negative impact on Thai petrochemicals prices and margins at a time when the country is facing increasing competition from the Middle East and North America for Asian markets.

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Responding to the shift in feedstock prices, which have favoured oil derivative naphtha, and the decline in the domestic production of gas, from which ethane is extracted, Thailand is looking to utilise more domestically produced naphtha. This flexibility should assist the sector to remain externally competitive, while making the best of local resources. PTTGC is conducting a retrofit project that will use 1.5mn tonnes per annum (tpa) of naphtha annually to produce 500,000tpa of ethylene, 261,000tpa of propylene and 100,000tpa of C4, including butadiene. This has the potential for downstream diversification and improved feedstock flexibility.

Thailand will see growth in output in 2016 due to the ramping up of petrochemicals capacities in 2015, including 250,000tpa of phenol, 15,000tpa of acetone, 90,000tpa of TOC Glycol, 115,000tpa paraxylene, 115,000tpa benzene and 20,000tpa orthoxylene. Meanwhile, Thai crackers will raise naphtha as a proportion of their feed in order to capitalise on lower naphtha costs as well as hedging against the impact of depleting gas resources.

Further expansions are expected in coming years. In the polymer segment, a 400,000tpa linear low density polyethylene (LLDPE) expansion is due to come onstream in 2018. Plans for a USD1bn polyurethane complex in Rayong include capacities of 200,000tpa propylene oxide and 130,000tpa polyether polyols. A USD200mn metallocene linear low density polyethylene (MLLDPE) plant is also planned at Map Ta Phut with 300,000-400,000tpa of capacity, coming onstream in Q118.

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