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21 Apr 2025

Econ Digest

Outlook for the Thai Polymer Industry

คะแนนเฉลี่ย
•    In 2025, the profitability of Thailand’s polymer industry is expected to improve, though it will remain below 2022 levels, thanks to the spread between polymer prices and feedstock costs. Although the spread is projected to widen by 8.8% following the decline in naphtha prices, it will still be 17% lower than in 2022.
•    Meanwhile, domestic demand for polymers is forecast to grow by 1.6%, driven by increased plastic packaging volumes in the food and beverage sector and rising sales of automotive replacement parts. However, contraction in the apparel market will likely limit overall demand growth.
•    Polymer export volumes are expected to decline by 2.7% this year. Exports of PE/PP to China are likely to fall due to China’s continued expansion of production capacity, while PET exports are also expected to decrease in line with lower shipments to the United States.

Thailand’s polymer business profitability is expected to improve in 2025, though it will remain below 2022 levels. 
This is due to a slight increase in polymer demand, while the spread between polymer prices and feedstock costs, despite rising, is still 17% lower than in 2022 (see Figure 2).
The spread, which reflects the preliminary profit margin in the polymer business, is expected to grow by 8.8% in 2025 (Figure 2). 
This year, spreads for PE, PP, and PET are projected to increase by 9.9%, 6.9%, and 4.0%, respectively (Figure 3), due to the following factors:
1.    Feedstock prices, particularly naphtha, are expected to decline in line with the downward trend of Dubai crude oil prices. Dubai crude oil price is projected to fall by 12% from 2024, reaching USD 70 per barrel this year.
2.    Polymer prices in Asia are not expected to drop as sharply as feedstock prices, supported by demand from China. The Chinese government has adopted consumption-driven stimulus policies and raised its budget deficit target to 4% of GDP to boost the economy in 2025.

Polymer demand in the Thai market is expected to grow by 1.6% in 2025 (Figure 4).
1.    Domestic demand for PE is projected to increase by 1.5% (Figure 5), driven by rising consumption of plastic packaging, which is set to grow in line with the expansion of the food and beverage sector—forecast to grow by 4.6% this year. In addition, the use of construction materials such as plastic pipes is expected to rise, supported by the recovery of the construction market, particularly public sector projects that have resumed following delayed budget disbursements in 2024.
2.    Demand for PP is expected to increase by 1.3% (Figure 6), driven by the growth in plastic packaging usage mentioned earlier, along with a projected 3.6% rise in sales of automotive replacement parts in Thailand this year. This is supported by the increasing number of registered vehicles in the country, which currently stands at approximately 20 million units.
3.    Demand for PET is expected to grow by 2.1% (Figure 7), driven by rising demand for PET in the production of bottled water and food packaging. However, this growth faces pressure from declining demand for PET-based synthetic fibers, which is expected to fall in line with the contraction of the apparel market due to competition from low-cost ready-made garments imported from China.

Thailand’s polymer exports are expected to contract by 2.7% in 2025 (Figure 8).
     Thailand’s polymer exports are not affected by the United States’ reciprocal tariffs, as PET—accounting for approximately one-fourth of total polymer exports to the U.S.—is exempt from such tariffs. Meanwhile, Thailand currently exports only minimal PE and PP to the U.S.
The export outlook for each polymer product can be analyzed as follows (Figure 9). 
1.    Thailand’s PE export volume is expected to decline by 2.2%, as China—the top destination for Thai PE exports—is projected to reduce its PE imports. This is due to China’s plans to expand PE production capacity by approximately 5 million tons this year and 6.5 million tons next year.
2.    Thailand’s PP export volume is forecast to decrease by 0.8%, driven by China’s plan to increase PP production capacity by 7.1 million tons in 2025. However, the decline in PP exports is not expected to be significant this year, as exports to Indonesia continue to show growth momentum following the Indonesian government’s decision last year to abandon its proposal to restrict PP imports. Currently, Thailand’s PP exports to Indonesia account for roughly one-fourth of total PP exports—comparable to the volume exported to China.
3.    Thailand’s PET export volume is expected to contract by 6.1%, primarily due to a projected decline in shipments to the United States, which is being affected by the country’s economic slowdown. Additionally, the U.S. has shifted toward importing PET from other North American countries, such as Mexico. Nevertheless, the Japanese market remains a key supporting factor, as demand for plastic bottle packaging in Japan’s beverage industry continues to grow, helping to partially offset downward pressure on Thailand’s PET exports.
Medium- to Long-Term Risks for Thailand’s Polymer Industry
•    The introduction of plastic management regulations may drive the adoption of eco-friendly raw materials. Under Thailand’s Phase 2 Plastic Waste Management Plan (2023–2027), producers using plastic as a raw material are required to take responsibility for collecting and managing plastic waste. This may encourage a shift toward environmentally friendly materials, such as bioplastics and recycled plastics.
•    Intensifying competition in the global polymer market due to China’s continued capacity expansion. China’s ongoing increase in production capacity has led to an average global capacity growth of 6% during 2021–2025, while global demand has grown by only 3% on average. This imbalance has resulted in oversupply and downward pressure on global polymer prices.

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