SINGAPORE (ICIS)--PTT Global Chemical's second-quarter net profit surged to Thai baht (Bt) 25bn ($746m) amid improved petrochemical product spreads although worries about global oversupply remain amid the pandemic.
|Thai baht (Bt) million||Q2 2021||Q2 2020||% change||H1 2021||H1 2020||% change|
The Thai chemical major’s aromatics business outperformed, with the price spreads of paraxylene (PX) and benzene over feedstock condensate surging in the June quarter from the same period last year.
The PX-to-condensate spread for the period averaged $283/tonne, up 4% year on year due to seasonal peak demand from the downstream purified terephthalic acid (PTA) and polyester markets in China in April-May, as well as growing demand from the polyethylene terephthalate (PET) resins sector.
"However, there are the number of factors that could pressure the overall PX market, such as the high inventory level of paraxylene inventory, additional supply entering China market in Q3 2021, and the impact of COVID-19 infections," PTTGC said in a filing on the Stock Exchange of Thailand late on Monday.
Meanwhile, the benzene-condensate spread in the second quarter surged to an average of $393/tonne from $146/tonne in the same period of last year.
Benzene prices in April-June 2021 were supported by higher crude oil prices, supply loss from plant turnarounds and reduced operating rates at several plants in Asia, as a well as delays in new capacity start-ups in China and a wider arbitrage window to North America, the company said.
Demand for benzene was supported by the restart of styrene monomer (SM) plants in the US following a winter storm earlier this year and higher consumption of healthcare and hygiene products stemming from the pandemic.
PTTGC’s aromatics plant utilisation rate rose to 102% in the second quarter of this year from 99% in the same period of 2020.
In the olefins business, average polyethylene (PE) prices surged by 65% year on year to $1,305/tonne in the second quarter, supported by strong crude oil prices, with supply constrained by planned turnarounds in north Asia, and low inventory in China.
"However, PE market in the second half of quarter was pressured by the resurgence of COVID-19 in Asia, especially the lockdown restriction in southeast Asia," PTTGC said.
"Also, the resurgence of COVID-19 in India impacted the demand slowdown, as well as the pressure from the upcoming new capacity from China and South Korea at the end of the quarter," it said.
PTTGC's olefins plant utilisation rate fell to 93% in the second quarter from 100% in the same period of last year, as a lightning strike incident in April at its Map Ta Phut complex disrupted production.
PTTGC expects its aromatics business to continue recovering against the backdrop of improving global economy, but price spreads may remain under pressure due to over oversupply, especially in PX due to high inventory levels in China.
It expects the PX-naphtha spread to be $240-260/tonne in the second half of the year.
"The expected demand from downstream business such as fibre and filaments industries, PTA, and PET bottle resin are expected to gradually recover as new PTA plants started up in this year," it said.
Crude oil prices and the global economic recovery will continue to support the olefins business, the company said.
PTTGC expects the average price of high density PE (HDPE) to be at $1,000-$1,100/tonne in the second half of this year.
Monoethylene glycol (MEG) prices could slip due to the start-up of new capacities but will remain supported by downstream demand especially from the textile industry.
The Thai producer can expect its overall 2021 EBITDA to more than double on the back of strong petrochemical outlook, as well as a slight improvement in refinery margins, Japan-based Nomura Global Markets Research said in a note on Tuesday.
The company's earnings will be supported by contributions from its new naphtha cracker which commenced commercial operations in June this year, it added.
Focus article by Nurluqman Suratman
($1 = Bt33.5)
Photo: Map Ta Phut industrial estate in Rayong province, Thailand - 24 June 2010 (By Apichart Weerawong/Shutterstock)
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