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Indonesia Petrochemicals Report Q4 2011
Business Monitor International, Sep 2011, Pages: 56
Business Monitor International's 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 investing to reduce reliance on imports, but the industry will remain small by Asian standards and the petrochemicals market will be dominated by foreign products, according to BMI's latest Indonesia Petrochemicals Report.
Recent months have seen a slew of new investments that will support Indonesia's drive towards greater self-sufficiency in petrochemicals. The most important development in coming years will be PT Chandra Asri Petrochemical (CAP)'s expansion programme, which includes raising ethylene capacity from 620,000tpa to 1mn tpa, building a 100,000tpa butadiene extraction facility and expanding PE capacity from 320,000tpa to 540,000tpa. Work on the butadiene facility began in Q311 with completion scheduled for 2013. CAP plans to have the cracker and PE expansions completed in 2014.
Having carried out acquisitions in the PTA/PET segment, Indorama Ventures is planning to invest in a new 300,000tpa plant to make polyester chips, due onstream in 2013, in its bid to become a leading vertically integrated polyester value chain producer. Meanwhile, in the chlor-alkili segment, PVC producer Asahimas Chemical is raising capacity at its Cilegon caustic soda plant by 30% to 500,000tpa. Completion is scheduled for Q113. Asahimas is raising capacity in response to rapid demand growth in Indonesia and other Asian countries.
In the fertiliser segment, PT Pupuk Kalimantan Timur (Kaltim) is building a large-scale nitrogen fertiliser complex at Bontang, East Kalimantan. The Kaltim-5 complex will be designed to produce 2,700tpd ammonia and 3,500tpd urea with completion scheduled for the end of 2013, making it the country's largest fertiliser complex. Meanwhile, PT Pupuk Sriwidjaja is planning to build two urea production facilities in East Java with combined capacity of 2mn tpa. This would fulfil the 1.8mn tonnes urea demand in East Java and Central Java that is being supplied by plants based in East Kalimantan and Palembang. Construction of the plants is expected to start in 2012 with completion scheduled for 2014. The plans are contingent on securing gas supplies with the company hoping to have a firm decision by the end of 2011.
Capacity expansion is crucial to overcoming the Indonesian petrochemicals industry's capacity constraints, which are pushing up prices on the domestic market and fuelling imports. PP output has been particularly affected by the cessation of operations at PT Polytama Propindo in August 2010, which has contributed to the surge in petrochemical imports. The closure of Polytama has created a gap of up to 320,000 tonnes of PP in the domestic market. There were signs in mid-2011 that the plant would resume operations, covering over a third of domestic demand. Added to this is CAP's expansion of PP production from 360,000tpa to 480,000tpa from Q211 as a result of debottlenecking. Meanwhile, Pertamina is constructing a new 250,000tpa PP plant at its Balongan complex and Polytama is looking at the expanding its PP capacity from 280,000tpa to 440,000tpa in 2011.
The expansion of Tripolyta's PP plant 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. However, BMI also believes that not enough progress was being made to ensure sufficient feedstock supply to the segment. In the Asia Petrochemicals Business Environment Ratings matrix, Indonesia is 10th out of 12 countries, with 48.3 points, up 1.6 points since the previous quarter due to the country's expanding petrochemicals industry. Indonesia is 8.7 points ahead of the Philippines and 15.1 points behind India. Plans for capacity expansion coupled with improved risk could raise the country's petrochemicals rating in the future, but BMI thinks it highly unlikely it will close the rank with Australia or India.
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