PTTGC Is Expecting Better Margin In 2023 For Their Downstream Polyester And Polyethylene Business
Following China's Reopening, A Recovery In Demand Is Expected By Thai PTTGC In 2023
PTT Global Chemicals, the Thai petrochemical giant, anticipates the demand for its polymers and aromatics products to enhance this year after China reopens.
The downstream industry's demand, including purified terephthalic acid (PTA), fibre and filaments, and polyethylene terephthalate (PET) bottle resin, should recover slowly during this year, with the upliftment of COVID-19 restrictions in China, a massive market for the enterprise.
The global petroleum and petrochemical products demand is anticipated to increase, as per PTTGC. However, it mentioned that increased unpredictabilities over the financial outlook as well as economic policy in an individual country stated PTTGC in the notes for its fourth-quarter and full-year 2022 economic developments.
It is expected by the company that its paraxylene (PX)-naphtha spread will stay steady at USD 300-340/tonne in 2023, whereas its benzene-naphtha spread is anticipated to reach USD 220-250/tonne, on the back of the latest capacities of downstream products like phenol.
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Last year, the PX and benzene spreads of the company plummeted because of a lower polyester textile market demand and China's zero-COVID policy.
The company predicts an increased average in 2023 for monoethylene glycol (MEG) prices at USD 570-600/tonne in comparison to the 2022 levels and steady prices of PTA. MEG and PTA are both raw materials that have applications in the textile industry.
For polymers, the company anticipates its price for 2023 polyethylene (PE) to stay within USD 1,150-1,200/tonne, below the USD 1,280/tonne average posted in 2022, considering the latest capacities arriving on stream amidst economic uncertainties worldwide.
The Thai producer, which is Thai energy major PTT, a petrochemical flagship company, hopes that its PE plant utilisation rate will be about 98% in 2023.
For the entirety of 2022, its average PE price dropped from 2021 by 1% amidst an all-around deceleration in demand, specifically in China, since its zero-COVID policy weakened the overall economic activity in the second-biggest economy in the world.
Along with the upliftment of the pandemic restriction's last vestiges in China, the economy is anticipated to bounce back in 2023; major economies in the west shall face a recession as they spiked the interest rates significantly to combat skyrocketing inflation.
Projects Update
Two modification projects by PTTGC's olefins are awaited to begin commercial operations within the year's second quarter. The project will enable improved usage of propane as feedstock, in accordance with the company's strategy to improve feedstock flexibility.
In the meantime, the company's combined venture project with Kuraray GC Advanced Materials, a Japanese producer of Kuraray, is anticipated to begin commercial operation during this year's first quarter.
The program created in Rayong at the Hemaraj Eastern Industrial Estate will have the ability to produce 16,000 tonnes/year of hydrogenated styrenic block copolymer (HSBC) and 13,000 tonnes/year of high-heat resistant polyamide-9T (PA9T).
In the following five years to 2027, PTTGC has recently prepared capital expenditure (capex) of USD 793m.
Restructuring In Progress
In a stock exchange filing, PTTGC, on 1 February, stated that it would continue to dissolve its subsidiaries PTT Phenol Co and GC Oxirane Co as a step of the group business restructuring plan.
Under the implementation of a new investment strategy, the company is concentrating its non-petrochemical assets and focusing more on high-value petrochemical businesses and chemical products.
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The Thai producer, in 2022, incurred a Bt8.75bn (USD 258m) net loss, with chemicals’ revised EBITDA dipping 36 percent to Bt7.58bn, but there was a 46 percent jump in group revenues with the complete unification of German speciality chemicals producer allnex, which was acquired by PTTGC in 2021.
As per the article by Procurement Resource, PTTGC is expecting a better margin in 2023 for their downstream polyester and polyethylene business following China’s reopening. The downstream industry's demand, including purified terephthalic acid (PTA), fibre and filaments, and polyethylene terephthalate (PET) bottle resin, will slowly rebound due to the relaxation of COVID-19 restrictions in China, which is the largest market for the company and the second-biggest economy in the world.
