Indonesia Petrochemicals Report Q2 2012
Includes 3 FREE quarterly updates
Indonesia continues to attract investment in its petrochemicals industry, which is insufficient to cover domestic demand, according to BMI’s latest Indonesia petrochemicals report.
South Korea’s Honam Petrochemical Corporation is planning to invest up to US$5bn in a complex in Cilegon, Banten province, with completion slated for 2016. It will have capacities for 1mn tpa ethylene 550,000tpa propylene and 140,000tpa butadiene. Downstream units would produce 600,000tpa PE, 600,000tpa PP and 700,000tpa ethylene glycol. Saudi Aramco is also studying an integrated refining and petrochemical project at Tuban, East Java, based on a 300,00b/d refinery; the proposed configuration of downstream units has yet to be disclosed. Meanwhile, Thailand’s Siam Cement Group (SCG) and PT Barito Pacific (Jakarta) are studying ways to raise US$500mn for an expansion of their Chandra Asri Petrochemical joint venture, which should see ethylene capacity raised from 600,000tpa to 1mn tpa, a new 100,000tpa butadiene extraction facility and PE capacity increased by 220,000tpa to 540,000tpa.
Work on the butadiene project began in Q311 and the plant is expected onstream in 2013, while expansion of the ethylene plant and the PE unit, as well as other facilities, is due to be completed in 2014. Whereas a number of South East Asian economies are bracing themselves for stagnating growth, we see Indonesia powering on to relatively robust growth of 5.8% in 2012 on the back of strong domestic demand, even as net exports' contribution to growth wanes. At the same time, risks to growth will be skewed to the downside. A prolonged global economic downturn could affect the archipelago's ability to reach its full growth potential, but exposure is limited compared to the rest of the region.
However, the government’s urban development programmes, which include affordable housing and infrastructure, are unlikely to play a major role in consumption growth. We remain cautious in our predictions about the impact of the programme, not least given the mixed success of Indonesia's previous government-backed housing schemes, with many of the houses bought by existing homeowners and sold to make quick profits. Depressed house prices are another factor affecting investment within the residential construction market, reducing potential profit margins for private developers when they come to sell the housing units once built. BMI notes that the country's huge informal economy in particular has helped contribute to the weak development of Indonesia's commercial housing market.
In the Asia Petrochemicals Business Environment Ratings matrix, Indonesia is 10th out of 12 countries, with 50.6 points. The country lies 12.9 points behind India and 22.5 points ahead of the Philippines. Plans for capacity expansion coupled with improved risk could raise the country’s petrochemicals rating in the future, but BMI thinks it highly unlikely it will close the gap with Australia or India.
Indonesia continues to attract investment in its petrochemicals industry, which is insufficient to cover domestic demand, according to BMI’s latest Indonesia petrochemicals report.
South Korea’s Honam Petrochemical Corporation is planning to invest up to US$5bn in a complex in Cilegon, Banten province, with completion slated for 2016. It will have capacities for 1mn tpa ethylene 550,000tpa propylene and 140,000tpa butadiene. Downstream units would produce 600,000tpa PE, 600,000tpa PP and 700,000tpa ethylene glycol. Saudi Aramco is also studying an integrated refining and petrochemical project at Tuban, East Java, based on a 300,00b/d refinery; the proposed configuration of downstream units has yet to be disclosed. Meanwhile, Thailand’s Siam Cement Group (SCG) and PT Barito Pacific (Jakarta) are studying ways to raise US$500mn for an expansion of their Chandra Asri Petrochemical joint venture, which should see ethylene capacity raised from 600,000tpa to 1mn tpa, a new 100,000tpa butadiene extraction facility and PE capacity increased by 220,000tpa to 540,000tpa.
Work on the butadiene project began in Q311 and the plant is expected onstream in 2013, while expansion of the ethylene plant and the PE unit, as well as other facilities, is due to be completed in 2014. Whereas a number of South East Asian economies are bracing themselves for stagnating growth, we see Indonesia powering on to relatively robust growth of 5.8% in 2012 on the back of strong domestic demand, even as net exports' contribution to growth wanes. At the same time, risks to growth will be skewed to the downside. A prolonged global economic downturn could affect the archipelago's ability to reach its full growth potential, but exposure is limited compared to the rest of the region.
However, the government’s urban development programmes, which include affordable housing and infrastructure, are unlikely to play a major role in consumption growth. We remain cautious in our predictions about the impact of the programme, not least given the mixed success of Indonesia's previous government-backed housing schemes, with many of the houses bought by existing homeowners and sold to make quick profits. Depressed house prices are another factor affecting investment within the residential construction market, reducing potential profit margins for private developers when they come to sell the housing units once built. BMI notes that the country's huge informal economy in particular has helped contribute to the weak development of Indonesia's commercial housing market.
In the Asia Petrochemicals Business Environment Ratings matrix, Indonesia is 10th out of 12 countries, with 50.6 points. The country lies 12.9 points behind India and 22.5 points ahead of the Philippines. Plans for capacity expansion coupled with improved risk could raise the country’s petrochemicals rating in the future, but BMI thinks it highly unlikely it will close the gap with Australia or India.
Contents
SWOT AnalysisIndonesia Petrochemical Industry SWOT
Indonesia Political SWOT
Indonesia Economic SWOT
Indonesia Business Environment SWOT
Global Petrochemicals Overview
Petrochemicals Market Overview
Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity)
Financial Results
Table: Financial Results Of Major Petrochemicals Companies, 2010
Global Oil Products Price Outlook
Emerging Asia Petrochemicals Overview
Indonesia Market Overview
Market Structure
Supply And Demand
Table: Indonesian Petrochemical Sector Capacity
PE Segment
Impact Of Rising PE Imports
Industry Trends And Developments
Regulation
Developments
Upstream
Table: Refineries In Indonesia
Petrochemicals Business Environment Ratings
Industry Forecast Scenario
Petrochemicals Outlook
Table: Indonesia’s Petrochemicals Sector, 2008-2016+ (’000 tpa, unless otherwise stated)
Macroeconomic Outlook
Indonesia – Economic Activity
Company Monitor
Chandra Asri (CACP)
Mitsui Chemicals
Petrokimia Gresik (Petrogres)
Glossary Of Terms
Table: Glossary Of Petrochemicals Terms
BMI Methodology
How We Generate Our Industry Forecasts
Chemicals And Petrochemicals Industry
Cross Checks
Business Environment Ratings
Table: Petrochemicals Business Environment Indicators And Rationale
Weighting
Table: Weighting Of Indicators Skip to top