Thai PTTGC expects demand recovery in 2023 on China reopening

SINGAPORE (ICIS)–Thai petrochemical major PTT Global Chemicals expects demand for its aromatics and polymers products to improve this year following China’s reopening.

Demand from downstream industries such as fibre and filaments, purified terephthalic acid (PTA) and polyethylene terephthalate (PET) bottle resin should gradually recover this year, with the lifting of COVID-19 restrictions in China – a major market for the company, it said on 13 February.

Global demand for petroleum and petrochemical products is expected to grow, PTTGC said, but cited “heightened uncertainties over the economic outlook and monetary policy in each country,” PTTGC said in the notes accompanying its fourth-quarter and full-year 2022 financial results.

The company expects its paraxylene (PX)-naphtha spread to be stable at $300-340/tonne in 2023, while its benzene-naphtha spread is expected to be at $220-250/tonne, supported by new capacities of downstream products such as phenol.

PTTGC’s PX and benzene spreads fell last year due to “lower demand of the polyester textile market” and the zero-COVID policy in China.

The company forecasts higher average 2023 prices for monoethylene glycol (MEG) at $570-600/tonne compared with 2022 levels, and stable PTA prices. Both MEG and PTA are raw materials that go into the textile industry.

For polymers, the company expects its 2023 polyethylene (PE) price to be in the range of $1,150-1,200/tonne, lower than the $1,280/tonne average posted in 2022 given new capacities coming on stream amid global economic uncertainties.

The Thai producer, which is the petrochemical flagship company of Thai energy major PTT, expects the utilsation rate of its PE plants to be around 98% in 2023.

For the whole of 2022, its average PE price fell by 1% from 2021 amid a general slowdown in demand, particularly in China as its zero-COVID policy took a toll on overall economic activity in the world’s second-biggest economy.

With the lifting of the last vestiges of pandemic restrictions in China, the economy is projected to rebound in 2023, but major economies in the west could be facing a recession as they significantly hiked interest rates to combat soaring inflation.

PROJECTS UPDATE
PTTGC’s olefins 2 modification project is expected to start commercial operations within the second quarter of this year. The project will allow increased propane usage as feedstock, in line with the company’s strategy to enhance feedstock flexibility.

Its No 2 cracker currently produces 515,000 tonnes/year of ethylene and 295,000 tonnes/year of propylene, according to ICIS Supply and Demand Database.

Meanwhile, the company’s joint venture project with Japanese producer Kuraray called Kuraray GC Advanced Materials is expected to start start commercial operation within the first quarter of this year.

The project built at the Hemaraj Eastern Industrial Estate in Rayong will be able to produce 13,000 tonnes/year of high heat resistant polyamide-9T (PA9T) and 16,000 tonnes/year of hydrogenated styrenic block copolymer (HSBC).

PTTGC currently has planned capital expenditure (capex) of $793m over the next five years to 2027.

RESTRUCTURING IN PROGRESS
PTTGC in a stock exchange filing on 1 February said that it will proceed to dissolve its subsidiaries PTT Phenol Co and GC Oxirane Co as part of its group business restructuring plan.

Under a new investment strategy being implemented, the company is reducing its non-petrochemical assets and re-focusing on high value petrochemical businesses and chemical products

In 2022, the Thai producer incurred a net loss of Bt8.75bn ($258m), with chemicals’ adjusted EBITDA falling 36% to Bt7.58bn, but group revenues jumped 46% with the full consolidation of German specialty chemicals producer allnex, which PTTGC acquired in 2021.

Focus article by Nurluqman Suratman

($1 = Bt33.87)

Thumbnail image: At the Laem Chabang Port in Chonburi Province, Thailand on 24 January 2022. (Source: Xinhua/Shutterstock)

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