Asia Petchems Outlook: Tough times keep ticking in '01

26 December 2000 06:01  [Source: ICIS news]

SINGAPORE (CNI)--High oil prices, tighter margins and (continuing) restructuring have been key facets of the petrochemicals industry in Asia Pacific in 2000.

Most of the industry has relied on imported naphtha for feedstock, which has meant that higher oil prices have directly affected profitability. Petrochemical producers have found it difficult to implement price increases for most products, because customers have to a large extent continued to operate in business environments that generally have been relatively fragile following the economic crisis of 1997-99.

The industry saw continued restructuring, undertaken mainly in response to that crisis.

However, much remains to be done. The full impact of the crisis was largely cushioned by the strong US economy, and several regional economies accelerated quickly. To a degree, this has weakened pressure to undertake further reform, and many petrochemical companies remain vulnerable.

While growth rates for the first half of 2000 reached up to 8% in some economies, the pace slowed down markedly in H2, and average Q4 growth is forecast to be 3%. Analysts now expect average 2001 growth of around 5% or less.

Selected Growth Rates - The Outlook

Country

1999

2000 (expected)

2001 (forecast)

China

7.1

8.0

7.0

India

6.4

6.4

7.1

Indonesia

0.5

5.0

4.5

Malaysia

5.8

8.5

5.0

South Korea

10.7

9.2

5.0

Taiwan

5.7

5.0

4.0

Thailand

4.2

5.5

4.0

Source: Deutsche Bank, December 2000 (presented at December's World Styrene Conference in Singapore)

As the year ends, the outlook for the regional petrochemicals industry going into next year hinges on three main factors:

  • The impact of a likely slowdown of the US economy, which will hurt Asian exports of petrochemicals and end-products.
  • The challenge of China's entry into the World Trade Organization.
  • New worldscale Middle Eastern olefins and polyolefins capacities aimed at Asian markets.

CNI will in the next few days briefly review the main developments of the past year in the region’s key petrochemical producing countries, and present analysts’, petrochemical producers’ and petrochemical industry associations’ preliminary concepts of the challenges that could face Asian petrochemical producers in 2001.


By: Stefan Baumgarten
+1 713 525 2653



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