Chem Systems: Outlook Strong For Asian Petrochemicals

National Petrochemical plc (NPC) is the partly state-owned Thai company that built Thailand's first olefins complex, shown here, at Rayong. Thailand, along with certain other East Asian developing countries, is emerging as a world-class petrochemical producer. NPC also is participating in Thailand's third world-scale integrated olefins complex, a 38.9 billion baht ($1.56 billion) integrated petrochemical complex that would include plants to produce ethylene, propylene, oxo-alcohols, linear polyethlene, and low-density polyethylene. In addition, NPC has signed a memorandum of agreement with Phillips Petroleum Co. for a 200,000 metric ton/year high-density polyethylene plant at Rayong. Construction of this plant is expected to begin in 1998, with start-up slated for 1999. Thailand's olefins building boom has enabled the country to emerge as a significant potential exporter of ethylene in 1997. NPC estimates Thailand will export about 1.5 million tons of ethylene this year, notably to China. NPC expects to account for 200,000-250,000 tons of that total.

Analysts see buoyant demand for petrochemicals in East Asia continuing to spawn more capacity additions for some basic products and key derivatives.

Demand for ethylene in East Asia is expected to grow at a rate of 11.2%/year, reaching 27.6 million metric tons by 2005.

That's the forecast of Chem Systems Inc. (CSI), Tarrytown, N.Y., in a new report.

At the same time, the long-awaited ethylene capacity buildup in Asia is finally getting under full swing.

India's Reliance Industries Ltd., Thai Petrochemical Industry Co. Ltd., and Petrochemical Corp. of Singapore's PCS II unit have started up ethylene complexes in second quarter 1997.

Ethylene plants being built by Gas Authority of India Ltd. and Hyundai Petrochemical Co. Ltd. are expected to go on line later this year.

By 2000, almost all major East Asian countries are expected to have new ethylene plants, says CSI.

In addition, Malaysia will have joined South Korea as a net exporter.

Propylene, benzene deficits

With increasing capacity of derivatives coming on line in the region, CSI notes deficits of propylene and benzene emerging.

East Asia's propylene shortage is expected to peak at 1 million tons in 1999, as new oxo-alcohol, acrylic acid/ester, propylene oxide, and cumene/phenol plants create additional demand.

The shortage of benzene-driven by a flurry of new styrene plants recently started up or expected soon in the region-will peak at about 800,000 tons by 2000.

CSI sees East Asia experiencing averaging benzene demand growth of more than 11%/year because of the styrene capacity push.

This will result in a major shortfall of benzene in East Asia.