PRLog (Press Release) – Mar 31, 2011 – The market for petrochemicals products will remain healthy in 2011 with GDP growth forecast at 5.3% and growth sustained at near this level going into 2012, according to BMI's latest Philippines Petrochemicals Report. Demand will be supported by both positive domestic economic conditions and export growth. The exchange rate against the US dollar is likely to remain stable, which should benefit Philippines' reg rc helicopter market place ional competitiveness as the Chinese yuan strengthens in value.
In 2010, the year-on-year (y-o-y) growth in plastic products showed a steady decline, largely due to base effects while basic chemicals saw a high level of volatility with sharp rises and dips in output. Performance was patchy, however, with output dipping in Q210 before making a modest recovery in Q310. In 2010, the Philippines had installed PE nameplate capacity of 475,000tpa, PP nameplate capacity of 340,000tpa and PVC nameplate capacity of 100,000tpa, but no ethylene capacity.
Growth in the domestic resins market is prompting oil and petrochemicals producers in the Philippines to consider investment in downstream industries. Plans mooted recently include Petron's indication that it would resurrect plans for a PP plant at Mariveles, in Bataan, with capacity of 160,000tpa PP, expandable to 225,000tpa. The plant will receive feedstock from Petron's nearby 180,000b/d oil refinery at Limay, which can produce 140,000tpa of propylene. Petron is in the process of evaluating the second phase of its refinery master plan, which should entail an additional investment of US$1.5bn. It plans to invest around US$1bn to upgrade its refinery, which will be funded by US$210mn in corporate bonds and a possible share issue. The upgrade will include a second Petro Fluidised Catalytic Cracking (FCC) unit - due to go onstream in 2014 - that will enable Petron to fully convert residual products to higher-value gasoline, liquid petroleum gas (LPG), diesel and propylene, used mainly for domestic consumption.
Until a domestic olefins source is developed, the main weakness in the Philippines' petrochemical industry will remain its dependence on imported ethylene and propylene, as well as aromatics and their derivatives. The production of speciality chemicals and propylene is likely to expand as Petron sets up new petrochemicals plants in the country with the proposed new units likely to bolster overall petrochemicals production by 2015. However, no firm plans have been made, so BMI is holding back on building Petron's plans into its forecasts. The situation may change over the coming months, especially if the economic situation forces the company to shelve some of its capital expenditure plans.
In BMI's Asia Petrochemicals Business Environment Rankings matrix, the Philippines helicop ter technology comes 11th out of 12 countries, with 39.9 points, up 0.6pp since the previous quarter due to an improvement in the country risk scenario. This puts it 6.8 points behind Indonesia and 9.4 points ahead of Vietnam. The Philippines petrochemicals sector suffers from a lack of locally available feedstock and a relatively small and inefficient local polymers manufacturing base, which is incapable of supplying the plastics industry. If announced plans for petrochemicals expansion come to fruition, the country could climb up the rankings, but is unlikely to exceed India's score. Nevertheless, the Philippines has a supportive business environment in which the petrochemicals industry can grow.
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