Research and Markets: Philippines Petrochemicals Report Q3 2010

Tuesday, Jul 06, 2010

Research and Markets (http://www.researchandmarkets.com/research/c683df/philippines_petroc) has announced the addition of the "Philippines Petrochemicals Report Q3 2010" report to their offering.

Business Monitor International's Philippines Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines' petrochemicals industry.

The Philippines petrochemicals market has weathered the economic storm as key consumers reported continued growth in 2009 into 2010, according to BMI's latest Philippines Petrochemicals Report. While we are optimistic about the Philippines 2010 recovery story, we caution that an earlier-than expected monetary tightening by the central bank may lead to lower spending on consumer products, thereby depressing demand up the production chain to polymers. Much will depend on inflationary pressures and how the central bank responds. Also, we are concerned of a Chinese double-dip slowdown brought about by Beijing's efforts to stem asset bubbles this year, as seen in its monetary tightening move in January 2010. As such, we caution that net exports could decline further, dragging down the broad economy as well but particularly export-oriented industries that utilise petrochemicals products. In the long term, the main weakness in the Philippines petrochemical industry is its dependence on imported ethylene and propylene, as well as aromatics and their derivatives. The improvement of the economic climate has opened up the prospect of an expansion in the country's petrochemicals industry. In March 2010, JG Summit Holdings indicated that it may revive plans for the country's first naphtha cracker to expand its petrochemicals business and provide feedstock for its polymer operations. The plant would cost US$500mn and would take 30 months to complete, according to reports. The indication came after the group sold shares in its airline unit and announced plans to raise its capital expenditure to more than PHP30bn (US$658mn).

The production of speciality chemicals and propylene is likely to expand as Petron sets up new petrochemicals plants in the country. With US$200mn in investment planned over the next three years, the new units are likely to bolster overall petrochemicals production by 2014. However, no firm plans have been made, so BMI is holding back on building Petron's plans into its forecasts. The situation may change over the coming months, especially if the economic situation forces the company to shelve some of its capital expenditure plans.

Greater competition with foreign resins producers as a result of trade liberalisation could hamper the recovery in output of upstream petrochemicals producers. However, the development of dynamic and growing local petrochemicals consuming industries can only improve the business climate for the industry in the long term with the potential for increased investment in capacity.

Source: Business Wire