Thailand's resin industry plans major polyolefin expansions as it tries to boost its international profile and expand exports to two of its main markets, China and the U.S.
The country's two largest resin makers, PTT and Siam Cement Group, plan to add more than 3.75 billion pounds of polyolefin capacity by 2010, driven in part by what the companies said is advantageous prices for Thai natural gas, at $2-$4 per million Btu, below the current $5-$6 price for North America.
Thai government statistics show exports of polyethylene and polypropylene to China, Thailand's second-largest market, were up 17 percent in the first half of 2006, and exports to the U.S., the No. 3 market, rose a whopping 112 percent.
The country's largest export market, Hong Kong, saw exports rise nearly 8 percent, with much of that likely passing through to China.
``We are exporting roughly half our capacity, but in the future when we add up new capacity, the export ratio will naturally increase, maybe to 60 or 65 percent,'' said Pailin Chuchottaworn, executive vice president of PTT's petrochemicals and refining business group. He spoke during a Sept. 18 interview at PTT's Bangkok headquarters.
PTT is adding 2.2 billion pounds of capacity, specifically 660 million pounds of low density PE, 880 million pound each of linear LDPE and high density PE.
As well, the company in June invested $250 million in Thai PP producer HMC Chemicals Co. Ltd., and said HMC will build a 660 million-pound PP plant.
PTT said it has seen a significant increase in interest from North America since last year's hurricane season snarled U.S. production.
``I think the insecure feeling of North American converters after the incidents last year opened up markets,'' Pailin said. ``They are using imported materials to hedge the risk.''
Exports of polyolefins from Thailand to the United States rose 112 percent in the first half of the year, to $162.7 million. China and Hong Kong together accounted for about $900 million in the same period, by comparison.
PTT's other significant export market is its neighbors in the Association of Southeast Asian Nations trading block, including Vietnam, which is the country's fourth-largest market for polyolefin exports.
Thailand's other large resin maker, Siam Cement Group, is doubling its total polyolefin capacity through new plants and debottlenecking, from 2.65 billion pounds to 5.3 billion pounds by 2010.
That includes new plants with capacities of 660 million pounds of HDPE and 880 million pounds of PP.
As well, both Siam and PTT are investing separately in a 660 million-pound HDPE plant in Iran with the state-owned National Petrochemical Co. of Iran, which they portrayed as a move to access cheap Middle East feedstocks.
But that project could be caught in world politics. The Bangkok Post newspaper reported in June that the U.S. government was pressuring the Thai companies to halt the project, citing its ongoing nuclear disputes with Iran. Pailin declined to comment.
Beyond seeking out low-cost Middle East production, Siam Cement said it is pursuing more specialty markets like plastic pipe, where it can gain advantages with formulations that withstand higher pressure, said Chokchai Montreeamornchet, pipe compound department manager for CCC Chemical Commerce Co. Ltd., the marketing arm for Siam's polyolefins business.
Chokchai spoke during an interview at the Thai International Plastics and Rubber Exhibition, held Sept. 14-17 in Bangkok.
The company plans to increase its pipe business from 22 million pounds a year now to 440 million pounds by 2010, he said.