New Energy research report from Business Monitor International is now available from Fast Market Research
[USPRwire, Thu Jan 02 2014] The Philippine petrochemicals market continues to grow at a strong rate, assisted by economic growth and domestic consumption. However, this is likely to benefit imported petrochemicals which, in spite of planned expansion in the petrochemicals sector, will continue to grow as a proportion of total domestic sales over the long term.
JG Summit Petrochemical Corporation (JGSPC) is building the country's first naphtha cracker plant - with 320,000tpa ethylene capacity - which is set to open from Q114. The development of olefins sources will overcome the main weakness in the Philippine petrochemicals industry, which is dependent on imported ethylene and propylene, as well as aromatics and their derivatives. Domestic supply of olefins feedstock should improve the competitiveness of downstream industries at a time when BMI expects a recovery in regional and global demand. There is potential to double capacity at the site. While capacity is modest by global standards, it does ensure that the Philippine petrochemicals industry will have a future, with potential for further investment and diversification.
In the first 10 months of 2013, however, chemicals performed strongly, with the Philippine value of production index (VaPI) more than doubling compared with the same period in 2012, although plastic declined by an average of 2.8% and rubber grew 2.8%. Rubber and plastic volumes were disappointing in H113, but bounced back going into H213.
* The domestic economy is still the picture of health, and it remains the key driver of the country's growth boom, with both investment and private consumption leading the way. As a result of a better than expected H113 performance, as well as a bright outlook over the coming quarters, we have upgraded our 2013 and 2014 full-year real GDP growth forecasts to 6.9% and 6.0% respectively. This should help sustain the local market, thereby ensuring that the domestic petrochemicals industry remains buoyant and that imports grow.
* Polyvinyl chloride (PVC) will be among those segments that will benefit from growth in the construction sector. The country's construction sector is still expected to be the fastest growing in Asia over the medium term as ideal conditions for construction activity persist. Consequently, we remain bullish towards the Philippine construction sector, with real growth forecast to reach 10.1% in 2014, an upward revision from 7.3% forecast in the previous quarter. In BMI's Asia Petrochemicals Risk/Reward Ratings (RRRs), the Philippines ranks 11th out of 12 countries, scoring 42.3 points, unchanged since the previous quarter. It now lies 2.1 points ahead of Vietnam and 9.5 points behind Indonesia.
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