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New Market Report: Philippines Petrochemicals Report Q4 2013

New Energy market report from Business Monitor International: "Philippines Petrochemicals Report Q4 2013"


Boston, MA -- (SBWIRE) -- 11/15/2013 -- 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 H113, however, chemicals performed strongly, with VaPI up more than 50% year-on-year (y-o-y), although plastic and rubber contracted 6% and 17% 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. Plastics output volumes have been adversely affected by JG Summit Petrochemicals taking its PE plant offline for expansion and temporarily shutting its PP plant for upgrades.

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Key developments in the sector include:

- The opening of JG Summit Petrochemical's planned cracker project - the country's first - has been delayed yet again to Q114, which will ensure that downstream output growth will remain constrained until 2014. The cracker will have 320,000tpa ethylene production capacity. 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.
- One of the key consumers of petrochemicals products is the automotive industry, which is set for strong growth. While we previously forecast an annual average growth of 2.3% in vehicle production over the 2013-2016 period, BMI has now upgraded its forecast to an annual average growth of 12% over the 2013-2017 period, to hit 100,000 units by 2017. This should stimulate growth in consumption of engineering plastics and rubber.
- Polyvinyl chloride (PVC) will be among those segments that will benefit from growth in the construction sector, which is starting to ignite private sector interest and could reach full-swing in 2013. We remain bullish towards the Philippine construction sector, with real growth forecast to reach 8.1% in 2013 and 7.3% in 2014.
- The weak spot will be in the retail sector, which contributes to the consumption of plastic end-products, particularly PE film and blow-moulded polymer products used in packaging. Retail sales are set to shrink in the medium-term, undermining growth in these polymer segments.

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