Issue 11/2016 - Global Chemicals Quick Facts

Global Chemicals Quick Review

The head of the Asian Petrochemical Industry Association on the sword in Singapore

The theme of the 2016 Asian Petrochemical Congress 2016 was held in Singapore on May 19, and the theme of this year's conference is "New Challenges: Promoting Flexibility, Innovation and Efficiency for Sustainable Growth
.
" In their speeches, heads of petrochemical industry associations from some Asian countries and regions discussed the challenges and opportunities
facing the petrochemical industry in Asia.
Asian petrochemical producers have regained their competitiveness amid low oil prices, so delegates are confident
about the future.
Tay Kin Bee, Chairman of the Singapore Chemical Industry Council, said: "The growing middle class in Asia is driving the demand for petrochemical products and related services, which will attract more foreign investment in petrochemical production capacity in Asia, while promoting healthy economic growth in Asia-Pacific countries and improving the lifestyles of
the region's population.
Tsutomu Tannowa, acting president of the Japan Petrochemical Industry Association, said GDP growth in Asian countries may be supported by the petrochemical industry, especially petrochemical producers that use naphtha as a feedstock should be able to benefit from low oil prices
.

Japanese chemical companies continued to have strong earnings last fiscal year

In the fiscal year ended March 31, most of Japan's major chemical companies made profits, while only a few experienced a decline in profits and no companies posted losses
.
Japanese chemical companies attributed the strong performance of the last fiscal year to improved economic conditions in Western countries and Japan, the weakening of the yen exchange rate and the increase in production profits due to the decline in raw material costs higher than the
selling price of products.
However, due to the continued cooling of China's economy, some Japanese chemical companies are still cautious about
the results of the current fiscal year.
Mitsui Chemicals expects the company's operating profit to be in line
with last year this year.
Shin-Etsu Chemical said that the company believes that the current economic environment is uncertain, so it has not released this year's profit forecast
.

New plastic overcapacity challenges producers' profitability

According to the latest analysis report by IHS Chemical, the large number of new plastic production capacity from low-cost producers in North America, the Middle East and China has led to an oversupply situation in the global polyethylene (PE) and polypropylene (PP) markets
.
This will put pressure on producers' profitability and will change the global competitive landscape
.
IHS expects that more than 24 million tons
of PE production capacity will be added worldwide during 2015~2020.
More than one-third (about 8 million tonnes) of the new capacity will come from the United States, which will significantly strengthen its position as a net exporter of PE, PP and other chemicals, thereby rebalancing
the global chemical trade landscape that has benefited the Middle East for decades.