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Indonesia Petrochemicals Report Q1 2012
Business Monitor International, Jan 2011, Pages: 54
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.
The Indonesian market for petrochemicals remains strong and resilient to global economic downturn and mounting external pressures, according to BMI’s latest Indonesia Petrochemicals Report. Investment is buoyant as inflation moderates and rate cuts assist with loan growth. GDP growth was estimated at around 5.8% in 2011 on the back of strong domestic demand, which drives both domestic petrochemicals production as well as the country’s net import requirement for thermoplastic resins.
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.
Thailand’s Siam Cement Group (SCG) is planning investment in Indonesia, citing its attractive high growth potential. In September 2011, SCG announced that its chemical subsidiary SCG Chemicals had entered into purchase agreements to acquire a 30% stake in CAP for IDR3.76trn (US$416mn). SCG Chemicals is also reportedly planning to make a bid for Indonesian petrochemical company Sulfindo Adi Usaha. Victoria Group, which owns Sulfindo Adi Usaha, is planning to sell the company for about US$700mn. SCG may be in competition with South Korea’s Hanwha Chemical for the acquisition.
In the Asia Petrochemicals Business Environment Ratings matrix, Indonesia is 10th out of 12 countries, with 48.3 points. 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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