East Asia may become petrochemical exporter

East Asia may become petrochemical exporter

SINGAPORE (AFP): East Asia's growing petrochemicals production will protect it from shortages as demand gallops, and the region could even turn into a net exporter by 2005, a conference was told here yesterday.

"The number and absolute production capacity of newly established and proposed petrochemical facilities will ensure that the region will not face a situation of shortages," said market analyst Kelvin Fahey.

Fahey, managing director of the Canberra-based SIRA International Corp. Ltd., said his prediction would hold true if there were no major disasters or petrochemical-plant shutdowns.

East Asia's petrochemical capacity, including ethylene, polyethylene and polypropylene, is tipped to increase to 39.18 million tons by 1998 from 25.81 million tons in 1993.

Ethylene and other petrochemicals are the building blocks for making plastics, fibers and packaging materials.

Fahey's estimate was based on a study of the petrochemical markets in China, Hong Kong, Taiwan, South Korea, the Philippines, Thailand, Malaysia, Singapore, Indonesia, Cambodia, Laos and Vietnam.

"Whilst a net importer of petrochemicals during the 1980s, East Asia is likely to become considerably more self-sufficient in resin supplies during the remainder of the 1990s and potentially a marginal net exporter by 2005," he said.

Resins are artificial plastic substances produced chemically and used in industry.

For example, new petrochemicals operations in the Association of Southeast Asian Nations (ASEAN) will see the group turn into a new export base for petrochemicals, Fahey said.

ASEAN groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Fahey, whose organization specializes in market research for the Asian chemicals, plastics, rubber and food packaging industries, said that by 2005, there should be some two to three million tons of surplus ASEAN production.

China, typically a net importer of resin, will accumulate considerable production capacity over the next decade.

The region's petrochemicals demand by 2001 is estimated at some 42 million tons. East Asia will then account for about 40 percent of the world demand, up from 30 percent now.

Fahey said petrochemical prices were likely to be less prone to wide fluctuations and "in fact suffer medium-term declines in real terms, due to oversupply of locally-made resins."