New Energy research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/06/2013 -- The Indonesia Petrochemicals Report Q1 2013 examines the latest plans for the expansion of the country's growing polymer resins sector. However, we warn that declining oil production and a restricted refining base could undermine naphtha feedstock supplies.
Furthermore, this report also analyses many of the trends in the domestic and external markets and the impact of these trends on investment decisions and the way producers manage risk. We also examine the continued potential for domestic consumption growth at a time when supply is unable to keep pace with demand.
The Indonesian petrochemicals market is proving to be stable and is growing, going against the overall trend in the world market. With GDP growth averaging over 6% and appearing to be sustainable, the Indonesian Olefin and Plastics Industry Association (Inaplas) has estimated demand growth in the polymers market at 7.5%. Imports account for around 50% of the market, particularly in feedstock, despite the country's 620,000 tonnes per annum (tpa) cracker operating at 90-100% capacity throughout 2012 as it sought to fulfil growing demand for polypropylene (PP). With a population of 240mn and strong growth, Indonesia should attract foreign investment in polymers. However, progress has been slow due to high levels of bureaucracy and an opaque regulatory system. This represents the main risk to the development of the Indonesian petrochemicals industry and could derail attempts to expand and diversify the sector.
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Over the last quarter BMI has revised the following forecasts/views:
- Most locally produced PP and polyethylene (PE) resins are used in food packaging applications with demand in this sector rising at around 10%.
- A significant increase in petrochemicals capacities is expected in 2013. Pertamina is also planning to open a new 178,000tpa propylene facility, Indorama Ventures is set to open a new 300,000tpa polyester chip plant and polyvinyl chloride (PVC) producer Asahimas Chemical is raising capacity at its Cilegon caustic soda plant by 30% to 500,000tpa. In the fertiliser segment PT Pupuk Kalimantan Timur (Kaltim) is building a large-scale nitrogen fertiliser complex with capacity to produce 2,700 tonnes per day ammonia and 3,500 tonnes per day urea, making it the country's largest fertiliser complex.
- Domestic demand for ethylene was estimated at 1.4mn tonnes in 2012 and is set to top 2mn tonnes by 2017.
- Demand in volume for engineering plastics is expected to grow at an annualized rate of about 9% - from 21,000tpa in 2011 to 45,000tpa in 2020 - as a result of burgeoning growth in the automotive industry.
- Chandra Asri and South Korea's Honam Petrochemical are both planning to expand and this could raise ethylene capacity to 2mn tpa by 2017, making the country self-sufficient.
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