Supply glut hits petrochemicals

The US-China trade war is exacerbating problems for the industry, which was already struggling from an oversupply, write Lamonphet Apisitniran and Yuthana Praiwan

- Lamonphet Apisitniran and Yuthana Praiwan

This year is likely to be another tough one for downstream petrochemical businesses, which serve various industries ranging from automotive and textiles to medical equipment and toys.

Products in these industries are mostly made from polymers supplied by petrochemical manufacturers.

While the applications for petrochemical products are broad, the industry faces a narrow window of opportunity this year.

Petrochemical makers face a supply glut, worsened by the trade war between the US and China. They are struggling to survive and grow in this industry, mainly through their own efforts.

UNPLEASANT MARKET

The global petrochemical industry is expected to remain sluggish this year as companies cope with an oversupply of petrochemical products, caused by a mix of factors ranging from an economic slowdown in China and Washington's new tariff policy to the fluctuations of crude oil and natural gas prices.

China is the biggest exporter of many petrochemical products, including polyethylene terephthalate (PET), and a rapid increase in their supply in the global market weakens the petrochemical industry, said Thosphol Chinandej, chairman of the Plastic Industry Club at the Federation of Thai Industries.

PET is a type of polymer used to make water bottles.

"Asia is the main market for China. Their products affect other petrochemical makers, similar to other industries that bear the brunt of Chinese exports," said Mr Thosphol.

One reason for the substantial petrochemical exports from China is its economic slowdown, resulting in lower local demand for the products.