APIC ’25: INSIGHT: Thai petrochemical sector contends with low-cost overseas rivals

BANGKOK (ICIS)–External factors continue to pressure Thailand’s petrochemical industry, driven by new capacity additions from low-cost producers, particularly those in the Middle East, according to a report by the Federation of Thai Industries, Petrochemical Industry Club (FTIPC).

• Global PE, PP, PX oversupply weigh on Thai industry
• Trade tensions threaten Thailand export growth
• Proposed US tariff hikes could disrupt supply chains

Despite these obstacles, the industry is on a gradual recovery path, driven by increasing demand in key sectors such as food packaging, pharmaceuticals, and electronics, the FTIPC said in a report released for the Asia Petrochemical Industry Conference (APIC) 2025.

The two-day conference in Bangkok, Thailand, ends on 16 May.

However, domestic consumption remains under pressure due to high household debt levels, which could impact the demand for durable goods and related petrochemical products.

Here is a summary of the FTIPC’s outlook for petrochemical products produced in Thailand this year:

Southeast Asia’s second-largest economy expanded in 2024 by 2.5%, accelerating from the 2.0% growth in 2023.

Household consumption growth over the period slowed to 4.4% from 6.9% in 2023.

The Bank of Thailand in March said that it expects Thailand’s economy to grow just above 2.5% in 2025, falling short of earlier projections, as high household debt and structural challenges in manufacturing continue to hinder an uneven recovery.

While signs of recovery are evident, the industry still grapples with significant challenges, particularly global oversupply in polyethylene (PE), polypropylene (PP), and paraxylene (PX), the FTIPC said.

“This oversupply continues to strain profit margins,” it said.

Additionally, geopolitical tensions, trade restrictions, and economic slowdowns in major export markets such as China and Europe pose further risks to growth.

Thailand is currently facing a 36% tariff on its exports to the US, with a temporary pause on these tariffs set to expire in July.

“The United States has raised concerns among Thai industries, particularly those heavily dependent on exports, by proposing tariff increases,” FIPTC said.

“If implemented, these tariff hikes could disrupt supply chains, elevate production costs, and pose significant challenges for Thai exporters,” it added.

“Higher import duties may reduce competitiveness and profitability, forcing businesses to reassess their market strategies and cost structures,” it said.

Looking ahead, Thailand’s petrochemical sector must navigate a volatile global market while capitalizing on domestic demand growth.

Strategic investments in feedstock diversification, sustainability, and advanced manufacturing are crucial for the sector’s success.

“To remain competitive, industry leaders will need to focus on cost optimization, innovation, and regional collaboration to strengthen their market position and drive long-term growth,” the FTIPC said.

Furthermore, Thailand’s PTT Global Chemical (PTTGC) is set to become the country’s first chemical producer to integrate US-imported ethane as an alternative feedstock.

Under the agreement, PTTGC will secure an annual supply of 400,000 tons of ethane to meet growing market demand in a highly competitive environment.

The company expects to begin receiving imported ethane in 2029.

PTTGC has entered into long-term agreements with key partners, including Very Large Ethane Carriers (VLECs) service agreements with parent firm PTT Public Co (PTT) and Malaysia’s liquefied gas transportation firm MISC.

Additionally, PTTGC has signed a long-term terminal service agreement with Thai Tank Terminal C (TTT) to facilitate the delivery and storage of ethane at the Map Ta Phut Terminal in Rayong.

Meanwhile, the Thai plastics industry is facing growing competition from finished goods imported from China and competitive supplies from the Middle East.

This influx of lower-cost products is intensifying market pressure, potentially affecting domestic manufacturers in Thailand.

Moreover, China’s oversupply across sectors like EVs, electronics, and plastics has impacted manufacturing in Southeast Asia, including Thailand.

Thailand’s overall polymer consumption has seen a slight increase last year.

However, Thai converters are facing significant challenges from geopolitical uncertainties, a global economic slowdown, and high inflation rates, exacerbated by a rise in major polymer imports from China and the Middle East.

Insight article by Nurluqman Suratman

Thumbnail image: At the Thai-Chinese Rayong Industrial Zone, located at the east coast of Thailand on 29 December 2021. (Xinhua/Shutterstock)