Petrochemical Market Overview in 2021 In 2021, the Thailand’s petrochemical industry expanded marginally compared to the previous year, which can be attributed to the following factors: (1) Recovery of domestic demand and the manufacturing sector after COVID-19 crisis was brought under better control (2) Rebound in exports, and (3) Robust recovery in the world’s major economies, like the United States and in Europe, buoyed by stimulus packages that boosted consumer spending. Manufacturers of food packaging, electric appliances and hygienic products and medical equipment staged a strong comeback in export destinations. This can be attributed to changing consumer behavior, particularly the trends towards home nesting, health consciousness. Meanwhile, the global supply chain disruption, including semiconductor crunch and shortages of shipping containers and cargo ships, and port congestion, significantly dampened demands in automotive, electrical appliance, electronics manufacturing sector and some export-oriented industries, etc. Highly contagious COVID-19 Delta variant, which spread quickly in Southeast Asia, including Thailand, in the second and third quarters. In response, the authorities imposed strict quarantine and travel restrictions that also resulted in labor shortages in certain manufacturing sectors, forcing many factories to suspend production or cut output, which caused a sharp decline in the demand for plastic pellets. Highly contagious COVID-19 Delta variant, which spread quickly in Southeast Asia, including Thailand, in the second and third quarters. In response, the authorities imposed strict quarantine and travel restrictions that also resulted in labor shortages in certain manufacturing sectors, forcing many factories to suspend production or cut output, which caused a sharp decline in the demand for plastic pellets. Competition intensified with a steady increase in production outputs in Asia Pacific, particularly in China, Vietnam, Indonesia, and Malaysia. The prices of petrochemical and plastic pellets in 2021 were higher, closely tracking the rising prices of crude and naphtha, the main feedstocks. The price increase can also be attributed to recovering demand in line with the global economy as skyrocketing shipping costs since late 2020. Overall, the prices of petrochemical products and plastic pellets in the first half of the year were more stable than the rest of the year second half. This was due to two main factors: First, there was a temporary supply shortfall in North America and Europe at a time when demand in those and nearby markets stayed in positive territory. Supply from other parts of the world was diverted there, pushing up prices in Asian markets. Second, new production capacity in Asia scheduled for late 2020 to the beginning 2021 lagged behind. The increased output was not realized until the second half of 2021. The sharp rise in supply from China, South Korea, India, and Vietnam put enormous pressure on prices. The average price of polypropylene (PP) in 2021 was USD 1,303 per metric ton, an increase of about 35 per cent compared to 2020. High-density polyethylene (HDPE) prices were up 34 per cent to USD 1,177 per metric ton, regular-grade polystyrene was up about 40 per cent to USD 1,463 per metric ton, and ABS averaged USD 2,386 per metric ton, or about 57 per cent up from the previous year, while Naphtha prices more than doubled (about 70 per cent increase). The Prices of Petrochemical Products and Polymers 3000 2500 2000 1500 1000 500 0 (Unit: USD/Ton) Source: ICIS Jan. 21 Feb. 21 Mar. 21 Apr. 21 May 21 Jun. 21 Jul. 21 Aug. 21 Sep. 21 Oct. 21 Nov. 21 Dec. 21 Naphtha HDPE Film PP Yarn GPPS ABS 84 IRPC PUBLIC COMPANY LIMITED 56-1 ONE REPORT 2021
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