Other Factors Influencing Financial Performance 2022 Business Outlook 1. Petroleum Business 2022 Crude oil outlook: The global oil demand forecast is approximately 103 million barrels per day reaching the pre-COVID-19 demand level. Such demand forecast increases by about 4.6 million barrels per day from 98.4 million barrels per day in 2021 thanks to improving overall COVID-19 pandemic situations that can be seen from extensive vaccine distribution, both main and booster doses, along with lower severity of the symptoms. These result in eases of COVID-19-related restrictions being followed by rising economic activities and improving confidence of economic recovery. Office of the National Economic and Social Development Council forecasts that global economic growth is expected to be 4.8% being supported by the restriction eases and the government’s economic stimulus that was also executed in 2021. For 2022 global oil supply, it is forecast to increase by 6.6 million barrels per day, YoY, to 103 million barrels per day being approximate to the global oil demand. The crude oil supply increase is mainly from OPEC of 2.9 million barrels per day; besides, OPEC and allies determine to gradually increase the production of 0.4 million barrels per day per month until April 2022. Moreover, the U.S. production is expected to rise at least 1 million barrel per day owing to a stable-high trend of the crude oil price boosting the U.S. producers’ investment confidence, and if the U.S.’ sanctions on Iran are lifted as expected, there will be around 1.4 million barrels per day of Iranian crude oil exports in 2H22. The Dubai price in 2022 is expected to be between USD 67 per barrel and USD 75 per barrel being close to the 2021 average price of USD 69 per barrel. Nevertheless, one of factors that may affect the 2022 crude oil price includes concerns over COVID-19 pandemic that may limit the oil demand recovery if there is a new surge in COVID-19 cases. Also, the ineffective lift of the U.S.’ sanctions on Iran as well as unplanned shutdowns of crude oil production may lead to a robust tight-supply condition that might help escalate the crude oil price. 2. Petrochemical Business 2022 Petrochemical outlook: The demand for petrochemical products in 2022 is expected to improve along with the global economic recovery. The Office of the National Economic and Social Development Council forecast that the global economy will grow by 4.8% following the recovery of major economies such as the U.S., Eurozone, U.K., Australia, and the newly industrialized economies (NIEs) that have eased pandemic control measures. Additionally, improvements in vaccine distribution and the development of antiviral medications will also boost market confidence. These lead to a petrochemical products demand growth forecast of 3-4% each year, mainly from dominant end-user-focused industries such as food packaging, hygiene and medical equipment, construction, electrical and electronic, automotive, and robotic. Nevertheless, threats to the petrochemical outlook involve new variants of COVID-19 and inflationary pressures, which increase faster than predicted that may result in tighter financial conditions. Furthermore, a reduction of single-use plastic consumption to resolve environmental issues needs to be monitored closely as this may affect the demand for petrochemical products and plastic pellets in the future. A lack of ships and containers continues to drive up freight costs; besides, the lack is expected to be a significant obstacle that may result in considerable demand decreases in several industries, such as automotive as well as electrical and electronic, due to the rising prices following higher costs. In 2022, it is expected that there will be certain new capacity beginning their commercial production in response to the increasing demand, especially in China as this may favor China’s self-sufficiency economic strategy, along with Malaysia of which the new capacity start-up is postponed from the prior year owing to the COVID-19 pandemic situations. According to these new capacity, product price spreads may be pressured. However, China imposed Power Rotation measures in association with Dual-control measures to limit domestic energy consumption towards the end of 2021 causing some Chinese manufacturers to reduce their petrochemical production rates, which may help alleviate concerns about the expected increase in the addition capacity. 181 Management Discussion and Analysis (MD&A) IRPC PUBLIC COMPANY LIMITED
RkJQdWJsaXNoZXIy ODg4NTI=