APIC ’24: Thailand chemicals demand to recover after challenging 2023 – FTIPC

SEOUL (ICIS)–Thailand’s petrochemical industry is expected to recover in 2024 as demand improves following a challenging 2023, which was marked by a global economic slowdown, inflation, and high energy costs that dampened consumption.

The Federation of Thai Industries’ Petrochemical Industry Club (FTIPC), in a report prepared for the Asia Petrochemical Industry Conference (APIC), noted that uncertainties in the global economy, including the recent Israel-Hamas conflict, China’s economic stagnation, and instability in US and European financial markets, have impacted the Thai economy.

KEY SEGMENTS IMPACTED
This challenging environment has already impacted key petrochemical segments.

Ethylene consumption, for example, declined in 2023 due to weaker economic conditions and subdued demand.

in ‘000 tonnes/year	2020	2021	2022	2023
Total Capacity	4,609	5,409	5,409	5,360
Production	4,516	5,045	4,530	4,463
Consumption by derivative products*	4,719	5,040	4,478	4,463
Exports	44	99	63	41
Import	163	43	87	95

*Consumption netbacked from polyethylene (PE), ethylene dichloride/vinyl chloride monomer (EDC/VCM), ethylene glycol (EG), and styrene monomer (SM) production

Demand for ethylene is expected to remain under pressure in 2024 due to feedstock volatility, weak derivative demand, and increased competition from new capacities in China, southeast Asia, and the US.

Additionally, polymer converters are grappling with major concerns such as geopolitical uncertainties, global recession fears, and high inflation rates, as consumers limit spending and further weaken demand for end-use sectors.

OUTLOOK AND CHALLENGES AHEAD
Looking ahead, Thailand, southeast Asia’s second-largest economy, is projected to grow by 2.2%-3.2% in 2024, fueled partly by a rebound in exports and increased private and public investment.

However, the recovery in global demand for petrochemicals is not expected to fully materialize until the second half of 2024, according to the FTIPC.

This is due in part to a supply glut in Asian markets caused by increased production capacity in China, Vietnam, Indonesia, and Thailand itself, as well as the Middle East, which has prompted producers to reduce output or maintain inventory levels to preserve profit margins.

Volatile economic conditions, geopolitical conflicts, new rules of global trade, and the trend of reducing carbon emissions and greenhouse gases present both opportunities and challenges for the petrochemical sector, the FTIPC said.

“Businesses must adapt to this changing landscape by enhancing competitiveness, flexibility, and continuous adaptation amidst external uncertainties,” it said.

“Integrating business operations with sustainable development is crucial, with a focus on sustainable business growth that meets the demands of consumers in a low-carbon and net-zero emission society.”

Focus article by Nurluqman Suratman