Though the Supreme Administrative Court's decision to suspend 65 projects in the Map Ta Phut area has stagnated Thailand's petrochemical industry, there was considerable progress in the development per the Petrochemical Industry Development Project, Phase 3, and each ongoing project had passed an EIA study from the outset. These projects are expected to be completed and begin production in 2010.
This leads KASIKORN RESEARCH CENTER (KResearch) to view that in 2010, Thailand's plastic pellet production capacity will increase by more than 2.4 million tons, and total production may also exceed domestic demand by up to 4 million tons, representing around half of the total production capacity. This would leave Thailand with more to export. It is expected that in 2010, the global plastic pellet export value will grow 5-6 percent YoY, in line with economic recovery that should boost demand. The trend of rising crude oil prices should also boost pellet prices.
ASEAN is Thailand's primary export market, and it has been growing 13.0 percent per annum, representing 21.7 percent of Thailand's total plastic pellet export value. It is projected that with the ASEAN FTA, import tariff reductions coming duty-free status (from the former 5 percent nominally imposed) on January 1, 2010, the competition in the ASEAN plastic pellet market will get tougher. In the short-term, it is expected that Thailand's value and volume of plastic pellets imported from Singapore will increase, particularly polyethylene and polypropylene as important raw materials used in the production of plastic packaging, as well as polyacetal and other engineering thermoplastics gaining rising demand from the growing domestic automobile industry.
Initially, the import value of plastic pellets coming in from ASEAN in 2010 will grow 3-5 percent over 2009. However, taking Thailand's import sources of plastic pellet over many previous years into consideration, Japan and South Korea are the sources that Thailand imports the most from, due partly to specifications needed in Thailand's downstream industries, particularly the automobile industry. So, KResearch projects that Thailand's tariff reductions may not boost imports from Singapore much.
Moreover, in 2010, when ongoing projects in the Petrochemical Industry Development Project, Phase 3, are completed and begin production, Thailand will have a higher production capacity and more excess to export, so this may help maintain Thailand's trade surplus status in ASEAN. It is expected that in 2010, the export value of Thai plastic pellets to the ASEAN market will grow 7-9 percent over 2009. Polyethylene and polyacetal are the main plastic materials that Thailand will export the most. Meanwhile, PVC pellets should be exported more, too, because Singapore does not produce PVC.
However, in 2010, there will be important issues that producers will have to watch, such as the possibility that plastic pellet prices in the global market will likely increase along with rising crude oil prices, and that domestic demand may rise with economic growth boosted by the ‘Thai Khemkhaeng' stimulus package, as well as the Dong devaluation tending to reduce our pellet exports to Vietnam, and problem-solving guidelines needed for Map Ta Phut–based industrial projects that may affect production and new investment.
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