|
|
 |
|
Viewing report
|
|
|
|
Indonesia Petrochemicals Report Q4 2010
Business Monitor International, Sep 2010, Pages: 53
The Indonesia Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's petrochemicals industry.
Indonesia is struggling with an increasingly difficult regional market scenario, with lower than expected rates of demand growth, oversupply and higher feedstock prices working to undermine petrochemicals margins, according to BMI’s latest report.
By mid-2010, Chandra Asri had reduced operating rates at its 600,000tpa cracker to 80-90% of capacity for an indeterminate period of time owing to negative operating margins. This comes after a period of strong growth in the polymer markets in H110 in which the market tightened and prices rose as consuming industries increased their inventories in anticipation of further price hikes. Local polymer demand had suffered in 2009 as a result of the economic downturn, despite domestic consumption in the wider economy holding up comparatively well. The decline was blamed on declining market activity by thermoplastics consumers in Indonesia and the falling value of the rupiah, helping to depress imports and leading to domestic scarcity. However, demand for polymers is expected to grow by at least 7% in Indonesia in 2010, in line with forecast 5.2% economic growth, thereby outperforming regional peers. Indonesia’s Pertamina was due to start-up its 180,000tpa metathesis propylene unit in mid-2010, providing much needed feedstock for downstream PP industries. BMI has previously voiced concerns that while PP expansions were proceeding , not enough progress was being made to ensure sufficient feedstock supply. Pertamina’s new unit will help secure supplies for the new 250,000tpa PP plant it is constructing at its Balongan complex. However, a number of other plans are in the pipeline for PP capacity expansion, which will require an increase in propylene supplies upstream. Meanwhile, Polytama is looking at the expanding its PP capacity from 280,000tpa to 440,000tpa. The project is expected to be completed by 2011 and will cost up to US$300mn. The expansion of Tripolyta’s PP plant in Merak to 480,000tpa in 2011 will provide an extra 120,000tpa of PP capacity in Indonesia. With domestic PP demand due to reach 1.1mn tpa in 2011, the expansion of capacity at both Merak and Balongan will not be enough to reduce Indonesia’s dependency on imported PP.
Meanwhile, government stimulus should spur growth in construction-related petrochemicals, particularly in the PVC segment. In terms of scale, measured in industry value, Indonesia is also among the largest construction markets globally, yet PVC capacity is at a modest 620,000tpa. The infrastructure aspect of the stimulus plan, though slow to trickle in the system (according to the government's own admission), did in the end work wonders for the industry value over 2009, with construction industry value recording real growth of 27% over 2009. This is a direct result of heavy government spending, the effects of which will continue to be felt in 2010. The removal of the stimulus will result in much tamer growth rates in the medium term and in turn will reduce growth in PVC demand.
However, there are widespread concerns of scarcity of domestically sourced materials over the short term as some producers have been cautious about increasing production fearing that it could swing prices the other way and create a situation of oversupply. BMI believes that it is unlikely Indonesia will see a double-dip in the local petrochemicals market. While demand growth is a positive sign that the market is picking up, a rapid rise in petrochemicals prices is detrimental to industries consuming petrochemicals. The government’s move to reduce import tariffs on PE and PP could create more stability in the market, as will the recovery in the value of the rupiah, which went from a low-point of around IDR12,000/US$ in Q209 to around IDR9,000 by the end of the year and is expected to average IDR9,500 over the whole of 2010. However, BMI cautions that this could lead to a flood of cheap Chinese imports at a time when the Indonesian market is opening up to China under a controversial free trade agreement.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
Customers who bought this item also bought
Indonesia Petrochemicals Report Q1 2011
Indonesia Petrochemicals Report Q3 2010
Indonesia Petrochemicals Report Q4 2011
Indonesia Petrochemicals Report Q1 2012
Philippines Petrochemicals Report Q1 2011
India Petrochemicals Report Q4 2010
Iran Petrochemicals Report Q4 2010
China Petrochemicals Report Q4 2010
Iran Petrochemicals Report Q1 2011
Iran Petrochemicals Report Q2 2011
|
|
|
|
