Indonesia Petrochemicals Report Q3 2013 - New Study Released

The Indonesian petrochemicals market is proving to be stable and growing, going against the overall trend in the world market. The automotive and construction sectors continue to provide market stimulus, although the ability to maximise growth potential is limited by several downside factors, such as rising inflation, bottlenecks in project execution and the 2014 presidential elections. Nevertheless, Indonesia's pace of growth and size of market, with a population of 240mn, continues to attract investment and BMI predicts that the country will be a net petrochemicals exporter by 2018.

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Annual GDP growth is set to exceed 6% over the medium-term, providing a robust context for consumption growth. Domestic demand for ethylene was estimated at 1.4mn tonnes (mnt) in 2012 and is set to top 2mnt by 2017. The country's plastics consumption reached 2.8mn tonnes in 2012 with PP and PE accounted for 70% of the total, and PVC and PET accounted for 30%, representing demand growth of 7.5%.

Over the last quarter BMI has revised the following forecasts/views:

* A significant increase in petrochemicals capacities is expected in 2013 with 100,000tpa of butadiene, 178,000tpa propylene and 300,000tpa of PET chips set to come onstream.
* In the fertiliser segment, PT Pupuk Kalimantan Timur (Kaltim) is building a large-scale nitrogen fertiliser complex at Bontang, East Kalimantan. The Kaltim-5 complex will be designed to produce 2,700 tonnes per day (tpd) ammonia and 3,500tpd urea, with completion scheduled for the end of 2013, making it the country's largest fertiliser complex.
* There are plans to raise ethylene capacity by 2.4mn tpa from the current 600,000tpa by 2018, with significant increases in downstream polymer capacities accompanying the development of naphtha-fed olefins plants.
* In the Asia Pacific petrochemicals business environment ratings matrix, Indonesia is 10th out of 12 countries with 51.8 points, up 0.4 points since the previous quarter due to continuing investment and growth in the petrochemicals sector, which have boosted the country's market risk score by five points to 75. It sits 10.2 points behind India and 9.4 points ahead of the Philippines.

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