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Philippines Petrochemicals Report Q1 2011
Business Monitor International, Dec 2010, Pages: 64
The Philippines Petrochemicals Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Philippines's petrochemicals industry.
The Philippines’ petrochemicals industry experienced an uncertain recovery in 2010, but should see growth improve in 2011 as the domestic market strengthens, according to BMI’s latest Philippines Petrochemicals Report. 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, with output dipping in Q210. In 2010, the Philippines had installed polyethylene (PE) nameplate capacity of 475,000tpa, [polypropylene] (PP) nameplate capacity of 340,000tpa and polyvinylchloride (PVC) nameplate capacity of 100,000tpa, but no ethylene capacity. Dependent on ethylene imports, the Philippines’ petrochemicals industry is vulnerable to external factors, particularly exchange rate fluctuations. Polymer production capacity is not yet large enough to justify a world-scale cracker, although the country is expanding its production of propylene, which could bolster PP output. JG Summit Holdings could revive a plan to build the country’s first naphtha cracker plant to expand its JG Summit Petrochemical Corporation (JGSPC) petrochemical venture, which makes PE and PP, costing US$500mn with construction taking 30 months to complete. The plans were shelved in 1999 due to concerns that it would not be able to compete with imports. A revival of the project in 2005 was postponed again, as the parent company chose to concentrate on telecommunications and its airline business. Now it is again in a position to put equity into the project, it is seeking to take advantage of growth in domestic consumption of plastics. However, with no firm plans announced by mid-2010, BMI believes project completion is unlikely before mid-2013.
BMI had been expecting that NPC Alliance Corporation would put its 275,000tpa PE plant in Mariveles which had been mothballed in 2002 back online in the event that it overcame electricity supply problems, but by 2010 no progress had been made. This would have raised PE capacity to 750,000tpa. The lack of movement towards reopening the plant means that it may now be closed indefinitely.
However, 2009 did see an increase in petrochemicals production capacities. In April 2009, Petron restarted its 19,000 barrels per day (b/d) Petro Fluidised Catalytic Cracking Unit (PetroFCC) and 140,000tpa Propylene Recovery Unit (PRU) at its Limay petrochemical plant. Also in April 2009, Petron started the commercial operation of its benzene, toluene and mixed xylene (BTX) unit at the site. It has the capacity to produce 22,800tpa of benzene, 150,000tpa of toluene and 220,000tpa of mixed xylene.
In BMI’s Asia Petrochemicals Business Environment Rankings matrix, the Philippines comes 11th out of 12 countries, with 39.3 points, up 0.1 percentage points (pp) since the previous quarter due to an improvement in the country risk scenario. This puts it 7.1 points behind Indonesia and 8.8 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 it 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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