Thailand's PTT Global Chemical seeks SE Asia expansion

05 March 2012 00:00  [Source: ICB]

CEO says strong growth across the ASEAN region makes it the favorite for further organic expansion.

PTT Global Chemical, Thailand's biggest petrochemical company, is keen to build production units downstream of olefins and aromatics in Southeast Asia, where growth prospects are strong, the company's top executive says.

 Map Ta Phut

 PTT Global Chemical plans to expand capacity at Map Ta Phut

"We are evaluating where should be the proper location - the most competitive location [for a production plant]," says PTT Global Chemical (PTTGC) CEO Veerasak Kositpaisal. "I think it would likely be in ASEAN [Association of Southeast Asian Nations]."

Southeast Asia has a sizeable 40% share of PTTGC's total exports, equivalent to the chunk of production devoted to China, the biggest importer of petrochemicals in Asia. "We are very good in this market and, very luckily, it is the growth market," says Kositpaisal.

MAJOR PLAYER
PTTGC was formed in October 2011 through the amalgamation of the two petrochemical affiliates of Thai energy giant PTT, making it one of the biggest petrochemical players in southeast Asia.

"I think the opportunity to grow in ASEAN, especially in the next five years, is going to be significant and we are ready to grow in the region," says Kositpaisal. Within ASEAN, PTTGC has successfully ventured into Malaysiathrough an oleochemicals joint venture with palm plantation owner Sime Darby, he said.

Its joint venture with Swedish chemicals producer Perstorp, announced late last year, will help the Thai company diversify its product portfolio and mark its entry into the polyurethane (PU) business. "We think PU consumption will continue growing in the [Asian] region," says Kositpaisal, adding demand is projected to be strong from the automotive and construction sectors.

MAP TA PHUT GROWTH
Meanwhile, the company is also expanding its production base at the Thai petrochemical hub of Map Ta Phut, as part of its strategy to boost exports, says Kositpaisal. An initial study of a possible 20-30% expansion of its olefins, polyolefins and aromatics capacity "looks good", he said. "Now, we will have to do some more detailed study." The study will cover PTTGC's three new polyethylene (PE) facilities producing high density polyethylene (HDPE), linear low density polyethylene (LLDPE) and low density polyethylene (LDPE).

For olefins, the company is looking at expanding the ethylene capacity of its 1m tonne/year ethane cracker in Map Ta Phut by at least a fifth, he said. "The study would be completed this year, and then we will check the economics and check all the regulatory issues before we can make further progress," says Kositpaisal. The planned expansion would take two years to complete, he adds.

"We [will] make the decision this year whether to do it [expansion] or not," the PTTGC executive said.

"The additional capacity will mainly be for export" says Kositpaisal. "PTT Global Chemical in the future will grow outside Thailand, both from export and - if possible - [from] a production site outside of Thailand."

BETTER FUTURE
Notwithstanding the difficult economic and financial environment in Europe and the US, PTTGC can expect better times ahead, since it exports most of its produce within Asia, he says.

"The growth is still in this region and we forecast that we are going to continue seeing growth," says Kositpaisal, adding that China - Asia's biggest and the world's second-largest economy - is likely to keep its annual economic growth at a healthy pace of 8%.


Veerasak Ositpaisal 
PX prices to stay strong for two years - PTTGC CEO
Asia's paraxylene (PX) prices are likely to remain high and margins will stay strong in the next two years, given tight supply amid strong demand from the downstream purified terephthalic acid (PTA) sector, according to PTT Global Chemical (PTTGC) CEO Veerasak Kositpaisal.

Kositpaisal described 2011 as "one of the very best years" for PX, with a strong increase in China's PTA capacity driving up demand. "We think, at least for another two years, we will continue seeing PX prices and margins - maybe not as good as last year, but at pretty high levels," said Kositpaisal.

At a presentation of PPTGC's results on 17 February, the company said the spread between PX and feedstock naphtha can be maintained at above $600/tonne (€450/tonne) this year because of stronger downstream demand.

Naphtha prices were at $1,084-1,087/tonne CFR (cost & freight) Japan, while PX prices were at $1,670/tonne CFR Taiwan/Ningbo at midday on 28 February in Singapore, according to ICIS.


By: Pearl Bantillo
+65 6780 4359



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