ICIS Top 100 Chemical Companies: Asia

Malini Hariharan

12-Sep-2014

Asian chemical companies managed to hold their positions in the ICIS global top 10, with a few exceptions, despite facing a difficult year.

With sales of $72.2bn, Sinopec, China’s state-owned refining and petrochemicals major, held on to the #2 position on the global list. But the major faced difficult conditions in its home market with intense competition from low-cost imports and entry of new local competitors. Operating profit for the chemicals segment declined to yuan (CNY) 868m from CNY1,172m in 2012. To overcome this threat Sinopec has focused on optimising its feedstock and product mix to increase the share of value-added products.

Ethylene production increased 5.58% to 9.98m tonnes last year while synthetic resins output was up 2.87% at 13.726m tonnes. For 2014, the company aims to produce 10.58m tonnes of ethylene. It also expects to complete a coal-to-chemicals project at Ningdong.

Mitsubishi, the second-largest chemicals company in Asia, saw strong sales growth in the petrochemicals and chemicals derivative segment in fiscal 2013-14 with the company managing to push through price hikes. Even in the purified terephthalic acid (PTA) business where the Asian market is reeling under overcapacity, Mitsubishi was able to boost numbers due to strong sales in India and depreciation of the yen.

But Mitsubishi continues to restructure its chemicals business. It is currently implementing an agreement signed with Asahi Kasei to unify cracker operations at the Mizushima site in Japan in order to optimize product configuration, increase efficiency, strengthen competitiveness and boost profitability.

Other Japanese chemical companies too enjoyed healthy growth in sales and profits last year. Sumitomo Chemical, ranked at 
#4 on the Asia list, posted 15% growth in sales supported by higher product prices and depreciation of the yen.

Mitsui Chemicals posted 11.4% growth in sales in 2013-14 despite volatile market conditions in phenol, PTA and toluene diisocynate (TDI) businesses which were hit by weak demand in China and oversupply. Mitsui has embarked on an aggressive restructuring programme for these businesses that includes closure of a 90,000 tonnes/year bisphenol-A (BPA) plant in Chiba, Japan, in March 2014 and suspension of 70,000 tonnes/year of BPA production in Singapore.

It also plans to close a 250,000 tonnes/year phenol plant and a 60,000 tonnes/year linear low density polyethylene (LLDPE) unit, both at Chiba, in September and December respectively.

Among the other Asian chemical companies, Thai major PTT Global Chemicals (PTTGC) faced many internal and external challenges last year, which resulted in a 2% drop in sales in 2013.

PTTGC’s 300,000 tonne/year LDPE plant in Map Ta Phut was shut for more than three months to address a technical problem at the unit. Meanwhile, an outage at the gas separation plant (GSP) No 5 of PTT, the parent firm of PTTGC, because of a lightning strike in August, prompted PTTGC to run some of its plants at reduced capacity.

In addition, 2013 was also the first full year that a new price formula for feedstock gas to its olefins and derivative business was applied. According to the company, the new formula aims at providing a fairer profit sharing between PTTGC and its parent.

Indian refining and petrochemical major Reliance Industries climbed to #23 on the global list thanks to 10.5% growth in sales during 2013-14. Surging export sales, a strong performance in refining and higher petrochemicals margins also drove up profits.

Petrochemicals sales rose 9.5% year over year to $16.1bn, with growth led by an 8.6% increase in prices while volumes grew 0.9%. Earnings in the petrochemicals ­business was supported by strong margins in polymers and polyester, which partly offset the weak margin seen in fibre intermediates such as PTA.

Most Asian chemical companies saw an improvement in their business environment in 2013 and expect this to continue in 2014. While signs of improvement in margins and profitability are evident, the risks cannot be ignored. These include high feedstock costs and an uncertain Chinese economy.

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