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SOUTHEAST ASIA
PETROCHEMICALS
A Rapid Evolution in Progress
CHOMMANAD
THAMMANAYAKATIPMANAGING CONSULTANT
NEXANT
A Rapid Evolution in Progress
Southeast Asia
Petrochemicals
August 2018
3APIC 2018 August 2018
The petrochemical industry in Southeast Asia is entering a new phase of further development
Petrochemical Industry in Southeast Asia
Demand-side Characteristics
Supply-side Characteristics
▪Market is generally demand driven, due to absence of ample low-cost
feedstock supply
▪Urbanisation wave and growth of consuming class offer significant
demand growth potential, also considering relatively low consumption per
capita levels
▪Each country’s petrochemical industry is generally dominated by 1-2 key
players
▪Project implementation may involve longer timelines compared to other
locations with more developed industries
▪ Feedstock supply may depend on refinery development or imports
New Phase of Further Development
▪ Largest single construction project in Malaysia
▪Vietnam’s first steam cracker complex and Brunei’s first aromatics facility
4APIC 2018 August 2018
Southeast Asia has continued to enjoy significant economic and social progress in recent years
Strong GDP Growth
Continued Urbanisation
Developments in Manufacturing
Increased Consumer Wealth
0%
2%
4%
6%
2013 2014 2015 2016 2017
Rea
l GD
P G
row
th
ASEAN World
0%
2%
4%
6%
8%
2013 2014 2015 2016 2017
Man
ufac
turin
g V
alue
A
dded
Gro
wth
ASEAN World
0%
1%
2%
3%
2013 2014 2015 2016 2017
Gro
wth
in A
SE
AN
Urban Population Total Population
0%
2%
4%
6%
2012 2013 2014 2015 2016
Rea
l Inc
ome
per
Cap
ita G
row
th
ASEAN World
Source: IMF Source: World Bank
Source: World Bank Source: World Bank
5APIC 2018 August 2018
This continues to support petrochemical and polymer demand growth in Southeast Asia
SE Asia Polymer Demand & GDP Growth
SE Asia
China
India
Japan, Korea & Taiwan0%
2%
4%
6%
8%
10%
0 50 100 150
Dem
and
CA
GR
in 2
017-
2027
Consumption per Capita in 2017 (kg)
Asia Polymer Demand Growth
0%
2%
4%
6%
8%
2011 2012 2013 2014 2015 2016 2017
Gro
wth
SE Asia Polymer Demand SE Asia GDP
Bubble size indicates
demand volume in 2017
Polymer demand includes HDPE,
LLDPE, LDPE, PP, PET, PVC, PS, EPS,
ABS, SBR, BR and PC
?????
As a whole, currently third-largest economy in Asia
Expanding labour force and shift from agriculture
to manufacturing
SE Asia Economy ?????
As a whole, currently similar market size as India
Key end-use sectors include manufacturing,
construction, transportation and agriculture
SE Asia Polymer Market
6APIC 2018 August 2018
Emerging markets offer strong potential for growth, while polyolefins and polyesters represent the key growth drivers in polymers
SE Asia Polymer Demand Growth
Singapore
IndonesiaMalaysia
Vietnam
Thailand
Philippines
0%
2%
4%
6%
8%
10%
0 50 100 150
Dem
and
CA
GR
in 2
017-
2027
Consumption per Capita in 2017 (kg)
Higher growth potential
PE
PPPVC
ABS
PS & EPS
SBR & BRPET
PC
0%
2%
4%
6%
0 100 200 300 400 500
Dem
and
CA
GR
in 2
017-
2027
Average Annual Demand Growth in 2017-2027 (kt)
Note: Polymer demand represents total demand for HDPE, LLDPE, LDPE, PP, PET, PVC, PS, EPS, ABS, SBR, BR and PC. Bubble size indicates demand volume in 2017.
Key growth drivers
High polymer demand growth rates are supported by GDP growth, urbanisation, increased consumer
wealth, growth in finished good exports, as well as substitution of traditional materials
SE Asia Polymer Demand Growth
7APIC 2018 August 2018
Polymer demand growth in Southeast Asia is expected to allow for significant domestic market opportunities
SE Asia Polymer Market – Present Capacity & Future Demand
0
2
4
6
8
10
12
Vietnam Indonesia Malaysia Philippines Thailand Singapore
Mill
ion
Tons
Capacity in 2017 Demand in 2027
Note: Polymer capacity and demand includes HDPE, LLDPE, LDPE, PP, PET melt phase, PVC, PS, EPS, ABS, SBR, BR and PC.
In some Southeast Asian countries, the additional domestic capacity requirement to meet
projected demand growth is quite significant
8APIC 2018 August 2018
Projected polymer demand growth volumes equate to considerable volumes of olefin requirements
SE Asia Polymer Demand Outlook, 2017-2027
Note: Equivalent olefin consumption volumes are shown
for illustrative purposes only. Actual polymer demand
growth may also be met by additional polymer imports.
Over the next decade, ethylene requirements from PE and PVC demand growth in Southeast Asia are
expected to be equivalent to ethylene production from 3-4 worldscale steam crackers
0 2 4 6 8 10
PP
PVC
LDPE
LLDPE
HDPE
Million tons
2017 2027
4.7% 1.8
5.5% 1.5
3.2% 0.4
5.0% 1.4
4.8% 3.1
CAGRVolume Growth
(million tons)
Equivalent Olefin Consumption
(million tons of olefin)
~ 4 (ethylene)
~ 3 (propylene)
9APIC 2018 August 2018
The olefins and aromatics industries are still in a relatively early development stage in several countries
Overview of Olefins and Aromatics Capacity in SE Asia, 2017
?????
10.1 mtpa total capacity
Mainly based on naphtha
Singapore – Most Developed
?????
3.8 mtpa total capacity
Based on naphtha and
NGLs
Malaysia
?????
11.8 mtpa total capacity
Based on naphtha and
NGLs
Thailand – Most Developed
?????
3.3 mtpa total capacity
Based on naphtha and
refinery FCC
Indonesia
?????
150 ktpa total capacity
Based on refinery FCC
Vietnam
?????
Less than 1 mtpa total
capacity
Based on naphtha and
refinery FCC
Philippines
Olefins64%
Aromatics36%
Olefins77%
Aromatics23%
Olefins66%
Aromatics34%
Olefins60%
Aromatics40%
Olefins100%
Aromatics0%
Olefins98%
Aromatics2%
Note: Olefins include ethylene and propylene. Aromatics include benzene and PX.
* Including TPPI
10APIC 2018 August 2018
Major new olefins investments are taking place in Malaysia, Vietnam and Thailand
Olefins Net Capacity Additions in SE Asia
(1)
0
1
2
3
4
5
6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Mill
ion
Tons
Ethylene Propylene
Thailand38%
Singapore32%
Malaysia15%
Indonesia10%
Philippines4%
Vietnam1%
Olefins Capacity in SE Asia, 2017
Malaysia46%
Vietnam34%
Thailand15%
Philippines4%
Indonesia1%
Olefins Net Capacity Additions in
SE Asia, 2017-2023
?????
ExxonMobil in
Singapore
JG Summit in
Philippines
CAPC expansion in
Indonesia
Shell restart in
Singapore
Major Additions ?????
PCG in Malaysia
PTTGC in Thailand
NSRP and LSP in
Vietnam
Major Additions
Note: Net capacity additions in forecast only reflect firm projects.
11APIC 2018 August 2018
These new olefins projects in the region are based on a range of different feedstocks
SE Asia Ethylene Feedstock Slate
?????
Limited volumes of ethane cracked in Malaysia
and Thailand
Other NGLs (e.g. propane and LPG) also used
across SE Asia
However, naphtha consumed as major feedstock
Current Trends
SE Asia Propylene Capacity by Process
?????
PCG – naphtha and LPG from new refinery
PTTGC – naphtha and LPG from existing refinery
LSP – domestic ethane and imported propane and
naphtha
Development Trends in Major Firm Projects
0%
25%
50%
75%
100%
2012 2017 2022
Per
cent
of T
otal
Cap
acity
Refinery Steam Cracker PDH Metathesis
?????
Firm capacity additions based on steam cracker
and refinery-based project
No firm projects involving on-purpose propylene
production
Development Trends in Major Firm Projects
12APIC 2018 August 2018
Major new aromatics investments are tied to refinery developments in Vietnam and Brunei
Aromatics Net Capacity Additions in SE Asia
(1)
0
1
2
3
4
5
2015 2016 2017 2018 2019 2020
Mill
ion
Tons
Benzene PX China83%
SE Asia15%
Others2%
Aromatics Net Capacity Additions in Asia,
2017-2020
?????
TPPI shutdown &
restart in Indonesia
Shell shutdown &
restart in Singapore
JAC shutdown &
restart in Singapore
Major Events ?????
NSRP in Vietnam
PCG (benzene from
cracker) in Malaysia
Zhejiang Hengyi in
Brunei
Major Additions
Note: Aromatics include benzene and PX.
Thailand43%
Singapore40%
Malaysia10%
Indonesia7%
Philippines0.3%
Aromatics Capacity in SE Asia, 2017
13APIC 2018 August 2018
Net trade volumes of derivative products in Southeast Asia will be impacted by new capacity additions
SE Asia Net Exports in Intermediates and Polymers
(0.5)
0.0
0.5
1.0
1.5
2.0
2.5
EDC VCM MEG Styrene Phenol &Acetone
PO PE PP PVC PS SBR &PBR
PETBottle
Mill
ion
Tons
2017 2020
The region’s net trade flows of major intermediates and polymers are not expected to change over
the next few years, with the exception of PP
Intermediates Polymers
14APIC 2018 August 2018
Intra-regional trade will continue to be important, facilitated by market proximity and the ASEAN Free Trade Area
SE Asia Net Exports in Intermediates
(2)
(1)
0
1
2
3
2014 2017 2020
Mill
ion
Tons
Singapore Thailand Malaysia
Indonesia Vietnam Philippines
Note: Intermediates include EDC, VCM, MEG, styrene, phenol/acetone and PO. Polymers include PE, PP, PVC, PS, SBR/PBR and PET bottle.
In particular, Vietnam and Indonesia are expected to continue requiring significant imports of
intermediates and polymers. Indeed, new projects are progressing in these countries.
SE Asia Net Exports in Polymers
(8)
(4)
0
4
8
2014 2017 2020
Mill
ion
Tons
Singapore Thailand Malaysia
Indonesia Vietnam Philippines
15APIC 2018 August 2018
Summary and concluding comments
High Demand Growth Potential
Naphtha & Refinery Integration
▪Polymer demand growth in Southeast Asia is expected to allow for significant domestic market
opportunities
▪Projected polymer demand growth volumes equate to considerable volumes of olefin requirements
▪However, demand growth trends remain highly sensitive to overall economic performance
▪New petrochemical investments are still heavily based on naphtha feedstock but increasingly
integrated with refinery developments to capture synergies, enhance competitiveness and ensure
feedstock supply security
▪However, the relative competitiveness of naphtha-based petrochemical production will also remain
impacted by crude oil pricing
Prospects for Further Development
▪Despite the start-up of firm projects, multiple countries in Southeast Asia are expected to sustain net
deficits in intermediates and polymers
▪ Further projects (e.g. in Indonesia) are continuing to progress and are expected join the current phase
of industry development in Southeast Asia
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stated otherwise in the presentation, the information contained herein was prepared on the basis of
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