Boston, MA -- (SBWIRE) -- 06/12/2013 -- BMI View: The Thai petrochemicals industry is now looking to add value to basic chemicals production following a surge in olefins and polymers capacities over recent years. We examine ongoing projects and assess the short-term and long-term risks as Asia struggles with over-supply and a volatile market scenario.

Having witnessed a surge in petrochemicals capacities over the past two years, the Thai petrochemicals industry will make a transition towards adding value to basic chemicals production as Thailand's leading petrochemicals producer PTT moves forward with its US$4.5bn investment programme. Majors are bound to follow suit as they exploit the industry's full potential in order to tap into fast growing South East Asian markets. The automotive industry will remain a key market, providing a source of stable revenue over the long term.

In 2013, petrochemicals growth will benefit from operations of Integrated Refinery and Petrochemicals Company (IRPC)'s expanded 395,000tonnes per annum (tpa) monoethylene glycol (MEG) plant and its increase in (ABS) capacity by 60% to 160,000tpa. In terms of speciality chemicals, Mitsubishi Gas Chemical (MGC) is overseeing a major expansion of polyacetal engineering plastic capacity at Thai Polyacetal, with a de-bottlenecking programme raising capacity by 5,000tpa to 60,000tpa. A second phase involves the construction of a 40,000tpa polyacetal facility, which will raise the total at the site to 100,000tpa. Both projects are expected to begin operations in 2013.

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Beyond 2013, in terms of high volume petrochemicals products, BMI only envisages a 260,000tpa increase in propylene capacity by 2015. The industry should continue to benefit from strong growth in the Asian automotives market, with Thailand now established as a major car producer. Over the long term, natural gas production could become a concern, with BMI forecasting output declining from an estimated 40bn cubic metres (bcm) in 2012 to 26bcm by 2021. With ethane representing 73% of current feedstock, this puts downward pressure on margins and may prompt greater use of naphtha in the future.

In terms of the local market, demand will be strong in the construction sector, although growth will decline to 4.5% in 2013 from an estimated 5.0% in 2012. The local automotive industry is also fuelling demand for engineering plastics with a strong rebound in 2012 followed by successive years of solid growth; by 2017, vehicle output will exceed 3mn units, which is more than 40% greater than the number in 2012.

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