Top 100: Asia leaders struggle with growth

23 September 2013 00:00  [Source: ICB]

Producers found sales growth challenging in 2012, and conditions remain tough in 2013. LG Chem and PPT Global Chemical move up in the rankings.

Asia’s Top 10 chemical leaders saw lacklustre sales in 2012 and continue to face challenges in 2013 with slowing growth in China, the region’s leading economy.

Asia mapSinopec, the state-owned Chinese refining and petrochemicals major, held on to the #2 position on the global list and the #1 slot on the Asia list but was adversely affected by the slowdown in China’s GDP growth.

Its sales were down 2% while operating profit plunged from $4.0bn in 2011 to $58.9m last year.

Sinopec acknowledged that the declines were due to a sluggish Chinese market where after years of strong growth, demand for synthetic resin rose by barely 2% last year and synthetic fibers by 5% from 2011.

The company was forced to trim ethylene production by 4.5% to 9.45m tonnes in 2012 while synthetic resin production was down 2.3% at 13.34m tonnes and synthetic fibre output was cut 3.5% to 1.33m tonnes.

Sinopec remains optimistic of achieving a 4% rise in ethylene production in 2013, supported partly by the start of a new cracker at Wuhan.

South Korea’s LG Chem managed to post 2.6% increase in sales and climbed up the global ranking chart to #13 from #15 in the previous year. The company also surpassed Japan’s Sumitomo Chemical for the #3 slot in Asia, as the latter’s sales in US dollars suffered from a weak Japanese yen in 2012.

Thailand’s PTT Global Chemical posted the most impressive gain in 2012, moving up six places to #18 on the global list and two places to #5 in the Asia list. Sales and profits rose, partly because of increased availability of gas feedstock which enabled the olefins division to run the crackers and polymer plants higher operating rates. Total sales volume of polyethylene (PE) was 1.447m tonnes, up from 1.254m tonnes in 2011.

Asia table

Meanwhile, India’s Reliance Industries and South Korea’s Lotte Chemical Corp held on to their positions in the global rankings and also posted increases in sales and profits.

Reliance Industries benefited from strong Indian demand for petrochemicals. Polypropylene (PP) and polyvinyl chloride (PVC) demand was up 13-14% while PE demand expanded by 10%. The polyester market was not as robust with demand increasing by only 5% as a weak global economic environment hit textile consumption and exports from India.

Asian chemical companies started 2013 with optimism but the business environment has been challenging. Feedstock costs, led by crude oil, have risen while product prices have been volatile.

China’s economy continues to struggle while the region’s other two growth engines, India and Indonesia, have seen sharp downward revisions in GDP forecasts.

Delivering growth in sales and profits this year promises to be an arduous task.

By: Malini Hariharan
+65 6780 4359

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