Petrochemical shortage to continue, analysts say

Petrochemical shortage to continue, analysts say

SINGAPORE (AFP): Asia will continue to suffer a shortage of petrochemicals despite feverish efforts to increase capacity to meet rapid economic growth in the region, industry officials and analysts said yesterday.

Demand for petrochemicals in the region would grow by up to nine percent annually, more than double world growth, because of increasing Asian exports of value-added products, such as textiles, clothing, footwear and machinery, they said.

"Asia at large will remain a net importer for petrochemical products," said Mandava Rao of the National University of Singapore's chemical engineering department at an international seminar on petrochemicals here.

Rao said current shortages in Asia could not be overcome even if the booming Southeast Asian economies moved from a demand position of 3.1 million tons per year to an excess supply position of 200,000 tons in three years as projected.

Asia's petrochemical market was currently a business of more than US$30 billion annually and was going to expand more than double to $80 billion by 2000, analysts attending the conference said.

To satisfy growing demand, many Asian nations had built up or were about increase their petrochemical capacities.

Major chemical producers from the west, facing relatively slower growth rates and increasing competition at home, are also tapping the Asian market.

Powerhouse

"With the existing (facilities) and also upon completion of the planned facilities, Asia is going to be the chemical powerhouse by the turn of the century," Rao said.

Anthony Kam, the Asia Pacific vice president of Mobil Petrochemicals International Ltd., told the conference that Asia's petrochemical industry could be more profitable if there were enhanced regional cooperation.

"By mutual cooperation, joint development efforts and free trade within the region, Asia's petrochemical industry can be a world class player with a bright and profitable future," he said.

Kam noted that essential ingredients to support a globally competitive petrochemical industry in Asia could not all be found in one nation.

While Japan, Singapore, South Korea and Taiwan -- the well- developed, export-oriented petrochemical producers -- had good infrastructure and skilled workers, none of them had any indigenous hydrocarbon resources, Kam said.

However, China, Indonesia, Thailand and Malaysia -- where petrochemical plants were being developed rapidly -- there were hydrocarbon resources but they lacked technology, skilled workers and infrastructure.

Takayuki Okada, the managing director of Petrochemical Corp. of Singapore, charged that some Asian governments had recently introduced protectionist measures to support their newly-started domestic petrochemical industry.

"Ultimately, the consumers are likely to find these measures costly and burdensome although the domestic producers may find it easier to enjoy these protection shelters rather than looking for ways to sharpen their competitive edge," he said.