Resins Industry

Resin Industry (PHILIPPINES)

The

Philippines'

producer

of

PE

(LDPE,

HDPE)

resins,

JG

Summit

Petrochemical, is a joint venture between Marubeni and local conglomerate Gokongwei. The venture began producing PE just this year after finishing construction in the second half of last year of a 200,000-tpy swing L-LDPE/HDPE facility. Ironically, the Philippines has no enough ethylene plants upstream and relies on imports for all supplies of the raw material. JG Summit intends to rectify this situation by bringing onstream a 350,000- tpy ethylene plant in 2001, but before that plans to expand its i ts LDPE capacity by 100,000 100 ,000 tpy. Rival NPC Alliance Corp. (Bataan Polyethylene) broke ground last year for a 250,000-tpy swing LDPE/HDPE facility targeted for completion in the latter half of 1999. Also PEMA Plastic Mfg. Corp. is a manufacturer of LDPE, HDPE resins. This company, funded by Sumitomo & Co. and others, also finished construction of an upstream ethylene plant in 2001. The Philippine plastic industry is relatively young which grew only in mid- 1960’s with the arrival arrival of technology for injection, extrusion, extrusion, and blow molding. Plastic pipe production began in 1970s with increased demand for the product as inputs for the irst two plants in the government’s waterworks waterworks projects. Two companies companies set up the f irst Philippines, these are Mabuhay Vinyl Corporation , put up the first synthetic thermoplastic and resin plant in Mindanao. Vinyl Consortium established a plant with an annual capacity of 18,000 metric tons for the production of Vinyl Chloride Monomer (VCM).

Both of these companies companies supplied inputs to other manufacturers manufacturers for the

manufacture of plastic pipes, footwear, fo otwear, packaging and calendaring items.

Subsectors of the Plastic Industry /Channel of Distribution :

Upstream Industries Extraction of the following elements from petroleum

Midstream Industries Processing of ethylene and propylene to yield synthetic resins, polyvinyl chloride chloride (PVC), polystyrene (PS), polypropylene (PP), polyethylene (PE)

Downstream industries Processing of synthetic resins to make finished and semifinished plastic products

Industrial and Consumer markets

Consumption of the Plastic Resins Industry

Polymer

Resins Percent Imported

Polyethylene

50%

Polypropylene

25%

Polyvinylchloride

20%

Polystyrene

5%

Only polyethylene and polypropylene are produced locally as of the year 2008. The remaining 50% of polyethylene inputs are are imported. Meanwhile, the main main products for the plastic industry includes Polybags (woven sacks, regular film bags, PVC pipes, Industrial crates, bottles bottles and housewares). Hence, the main main markets of plastics include the manufacturers and producers of sugar and rice, millers and supermarkets,

contractors, hardwares, restaurants, fish dealers, bakeries, soft drink manufactures, cosmetics, health care, food and pharmaceutical industries and consumers, wholesalers and retailers. The demand determinants vary depending on the market. Industrial clients mainly look for quality rather than price. For the mass mass consumer market, price is a critical factor. Philippine Trade Statistics of Plastic Resins

Philippine Top Imports of Plastic Resins Corresponding Top 5 Countries

Value – Millions of US$ H.S. Code

Product Description/Top 5 Countries

3901

3907

2009

2008

Ethylene, Primary form

126.167

173.660

Singapore

42.818

37.944

Korea

16.994

20.247

Thailand

12.881

21.386

Japan

11.821

14.047

Malaysia

10.342

15.830

Others

31.31

64.206

Polyether,

104.379

155.903

22.709

34.410

Singapore

21.198

34.282

Taiwan

14.961

11.383

Indonesia

14.515

12.237

Expoxide

Thailand

10.641

24.907

Japan

20.355

38.684

89.979

87.975

Thailand

16.542

12.493

China

14.901

13.217

Japan

11.678

7.123

Malaysia

7.832

11.397

Hongkong

7.712

10.270

Others

31.314

33.475

Plate, Sheet and

83.645

101.515

Korea

13.081

12.149

Malaysia

12.607

10.745

Japan

10.006

10.935

Indonesia

9.493

13.072

USA

8.704

9.615

Others

29.754

44.999

Primary

74.492

167.810

Singapore

22.245

40.155

Korea

16.401

25.579

Thailand

9.008

17.084

Others 3923

Box, Bag, Closures, etc.

3920

Cell

3902

Other Olefin

3921

3910

3919

Japan

7.929

11.817

Taiwan

4.172

26.541

Others

14.737

46.634

Sheets

69.394

76.763

Japan

18.110

15.659

Malaysia

17.811

19.085

USA

11.878

11.874

Thailand

3.492

3.276

Indonesia

3.272

6.339

Others

14.831

20.530

form

66.701

102.195

Korea

34.294

46.236

Japan

12.536

38.913

Norway

5.361

0.527

USA

3.877

4.110

Thailand

3.232

2.780

Others

7.401

9.630

Materials

56.431

68.692

Japan

19.731

21.922

Korea

6.847

6.711

China

5.159

5.813

Malaysia

4.347

5.579

Singapore

3.823

6.666

Thailand*

2.806

2.991

Other

13.718

19.090

Other Plate and

Silicone, Primary

Self Adhesive

3926

3917

3906

3903

Other articles of Plastics

52.826

69.988

China

10.076

11.405

Hongkong

7.836

16.778

Japan

6.584

6.554

Thailand

5.438

6.482

USA

3.897

4.098

Others

18.995

24.671

and fit

38.808

44.030

Spain

12.763

21.346

USA

9.331

5.646

Japan

7.815

7.062

China

2.690

2.906

Germany

1.240

1.721

Thailand*

0.284

0.301

Others

4.685

5.048

Acrylic Polymers

29.550

27.857

Japan

7.948

4.877

Taiwan

6.628

5.838

Singapore

5.304

4.436

Thailand

2.207

2.633

Indonesia

1.750

2.168

Others

5.173

7.455

29.652

52.861

Tube, pipe, hoses

Styrene, Primary Forms

3909

3924

Korea

9.131

15.453

Taiwan

4.949

8.899

Malaysia

3.735

9.315

Japan

2.455

6.164

Thailand

1.635

3.112

Others

7.747

9.918

Primary Form

25.250

38.945

Singapore

9.406

13.804

Malaysia

3.507

4.518

Japan

2.403

4.790

Thailand

2.077

2.513

India

1.192

2.620

Others

6.665

10.700

plastics

20.925

18.896

China

12.100

9.615

USA

1.469

1.526

Korea

1.461

0.841

Malaysia

1.374

1.331

Thailand

1.324

1.700

Others

31.970

3.883

19.389

15.702

Amino-Resin,

Tableware and household of

3912

Cellulose of chemicals

3908

3911

USA

11.638

7.345

Germany

1.390

1.653

China

1.126

0.976

Netherlands

0.922

0.997

Sweden

0.707

1.316

Thailand*

0.330

0.175

Others

3.276

3.240

Polyamides

9.588

11.485

Korea

2.899

3.064

Thailand

1.627

1.652

Singapore

1.225

2.782

Japan

1.224

0.852

Taiwan

1.118

0.915

Others

1.495

2.220

primary form

9.428

16.084

Japan

3.038

4.869

China

1.564

1.158

USA

1.135

3.894

Korea

0.852

1.140

Singapore

0.790

1.633

Thailand*

0.075

0.244

Others

1.974

3.146

Petro Resins,

Source : National Statistics Office and World Atlas Based on the Philippine Trade Statistics, the country imported a total amount of Plastic resins amounting to US$948.386 million in 2009 a decreased of 35.40%

compared in 2008 which totaled totaled to US$1,284.097 US$1,284.097 million. The country imported imported mostly raw materials of plastics since there are no domestic factories of such products. Top imported raw materials of plastics resin in 2009 which include ethylene which amounts to US$126.166 million, polyether, expoxide at US$ 104.379 million, other olefin primary at US74.492

million , silicone, primary primary form form at US$66.701 million, million, self adhesive

materials at US$56.431 million. million. On the other hand, the finished plastic materials that the Philippines imported were box, bag, closures at

US$89.979 million, million, plate and

sheets at US$83.645 million, tube, pipes and hoses at US$38.808 million and tableware and houseware at US$20.925 million. Meanwhile, top importing countries of resins (LDPE, HDPE) include Singapore, Thailand, Korea, Japan, USA and China. China. However, the major factors factors affecting supply and demand of resins to fluctuate or change because of fluctuating price of resins in the market which caused by b y the feedstock costs or raw ra w material costs, co sts, rail congestion, imports, exports and new capacity, and unstable global crude oil prices which becomes expensive and since the major raw materials in production of resins are imported from abroad and prices are subject to currency changes, fluctuating currency has a negative effect on the downstream industry because of the limited purchasing power of their market., most multinational such as Procter & Gamble and Colgate now outsource manufacturing operations to Thailand, Vietnam and other countries with a cheaper cost of production. Wholesale clients are diminishing. diminishing. As for the consumer consumer market, the downstream firms are having difficulty in managing their costs due to the limited budget of consumers. In the middle of economic crisis suffered by the world recently, the business climate in the plastic raw material industry and plastic industry in the Philippines are facing a serious challenge. Plastic raw material industry is influence by the fluctuation of global crude oil price. As a result, the price of naphtha as the raw material of olefin industry (ethylene and propylene) is not stable. The other red tape is the unbalance between supply and demand, so it encouraged the increase of plastic raw material price, such as PE resin and PP resin.

When the global crude oil price was increased to reach US$ 141 per barrel by the middle of 2008, the price of both commodities was increased to reach US$ 2,000 per ton. In September 2008, global crude oil price was decreased to a level of US$ 109.73 per barrel, PE and PP plastic raw material price was decreased to become US$ 1,600  – US$ 1,650 per ton. In January 2009, the global oil price was fell to the lowest level of about US$ 41.96 per barrel, the price of PE and PP in the global market was still at the level between US$ 790 – US$ 850 per ton. The result of plastic raw material price movement, which was becoming anomaly (a situation that deviates from the normal condition), local upstream petrochemical industry was becoming sluggish. Some producers had difficulty in increasing production. For example, PT Polytama Propindo has not the courage to increase their production, because they are waiting for the price improvement. PHILIPPINE ANNUAL DEMAND AND SUPPLY OF LDPE RESINS/PELLETS Philippine Demand Year Tons 2000 262,593 2001 267,651 2002 279,602 2003 269,949 2004 272,401 2005 274,984 2006 265,111 2007 272,820 2008 270,972 2009 269,634 Philippine Supply Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tons 250,322 249,462 247,562 247,321 244,765 234,990 233,989 231,987 229,871 229,678

SOURCE: National Statistics Office Data  Philippine Plastics Industry Association Data