InterviewAPIC ‘09: China’s rise not to dent Asia growth - SCIC

15 May 2009 12:21  [Source: ICIS news]

By Bohan Loh

SEOUL (ICIS news)--China’s projected rise to petrochemical self-sufficiency will not dent the prospects for the industry's growth in the Asia Pacific region, according to the chairman of the Singapore Chemical Industry Council (SCIC) on Friday.

“Even if China becomes increasingly self sufficient, we will get more capacity being required to meet demand as there will be continued growth elsewhere around the world,” said A Chockalingam, who spoke on the sidelines of the ninth Asia Petrochemical Industry Conference (APIC).

“China cannot meet all its own needs. There will nevertheless be a need for products,” he said, adding that China’s petrochemical imports will shrink over time as capacities begin coming on stream between now and 2017.

Consultancy firm SRI Consulting had estimated that 11.18m tonnes of ethylene capacity would come on stream in China by 2017 and that the country would be able to produce up to 70% of its ethylene requirements by that period.

Chockalingam said that people might have become a little jumpy after the industry recently saw prices plunge from historical highs, which was followed by a severe period of destocking by players.

“If you look at consultant projections, we may have lost about two years worth of growth. But in the long term, there will still be growth around the world,” he said.

Chockalingam also noted that the recent tax proposal by US President Barack Obama to tax the overseas income of US companies might spark retaliatory protectionist measures from other trade nations.

“You can’t just expect that the US can retain everything it wants and export normally. If they do that and other countries impose taxes, then it’s back to the old game,” he said.

“If people were to go into a ‘protectionist’ mode, then all the growth they had for the past few years would be erased,” he added.

In discussing the outlook for chemical pricing during the second half of the year, Chockalingam said that it was difficult to predict if the rally in prices would be sustained through the rest of the year, and said that people were generally “uneasy” going forward.

“This upturn may not persist throughout the year, but business must go on. There is demand for products, people do require products. The demand may be lower than what it is today, but it will not be zero,” he said.

In his closing remarks at the conference, Chockalingam said that the long-term prospects for the petrochemical industry in Asia remained bright, despite the ups and downs experienced in the short term, and companies should focus on the fundamentals of their operations.

APIC began on 14 May in Seoul, South Korea, and will conclude on 15 May.

See John Richardson’s Asian Chemical Connections Blog
Read Paul Hodges’ Chemicals and the Economy Blog
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By: Bohan Loh
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