Boston, MA -- (SBWIRE) -- 07/27/2012 -- The Q312 Philippines Petrochemicals Report examines how the external environment and the value of the peso are impacting on local producers over the short term. It also analyses prospects for upstream growth and the potential for monomer feedstock production, which will be key to long-term industry growth. It also assesses the risks and opportunities facing end-markets, particularly the construction sector, which is set to be boosted by investment into infrastructure.
Growth in the domestic resins market is prompting oil and petrochemicals producers in the Philippines to consider investment in downstream industries. In 2011, Petron brought online a polypropylene PP plant at Mariveles, in Bataan, with a capacity of 160,000 tonnes per annum (tpa), expandable to 225,000tpa. It receives feedstock from Petron's nearby 180,000 barrels a day (b/d) oil refinery at Limay, which can produce 140,000tpa of propylene. Petron is proceeding with its plans to upgrade its refinery to include a fluid catalytic cracker (FCC), with a propylene production capacity of 250,000tpa due from 2014.
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Until olefins sources are developed, the main weakness in the Philippines' petrochemicals industry will remain its dependence on imported ethylene and propylene, as well as aromatics and their derivatives. Greater competition with foreign resins producers as a result of trade liberalisation could hamper the recovery in output of upstream petrochemicals producers. However, the development of dynamic and growing local petrochemicals consuming industries can only improve the long-term business climate for the industry, with the potential for increased investment in capacity.
Key developments in the sector include:
- In BMI's Asia petrochemicals risk/reward ratings, the Philippines ranks 11th out of 12 countries, scoring 39.6 points. This puts it 11.0 points behind Indonesia and 9.1 points ahead of Vietnam.
- In Q112, the volume of plastic production was up 7.5%. However, chemical output was up just 2.2%, although this follows a year when production surged 22.2%, with production reaching full capacity. BMI is forecasting chemicals volume growth of around 1% in 2012.
- JG Summit Holdings may revive a plan to build the country's first naphtha cracker plant. The venture would carry a price tag of US$500mn, with construction to take 30 months. The company is in a position to put equity into the project and is seeking to take advantage of growth in the domestic consumption of plastics. However, with no firm plans announced, BMI believes project completion is unlikely before mid-2013.
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