Another challenging year awaits the petrochemical industry as it continues to deal with a supply glut, while a hotter trade war between the US and China could impact the sector, says IRPC Plc, the petrochemical arm of national oil and gas conglomerate PTT Plc.
The oversupply of petrochemical products is mainly driven by exports from China, which should continue as consumption is low, said Terdkiat Prommool, president and chief executive of IRPC.
Global demand for petrochemical products is expected to grow by 1-3% this year, he said.
IRPC is concerned about the impact of the US trade policy on Chinese exports after President Donald Trump imposed an additional 10% tariff on products from China, effective from Feb 4.
The new levy drew swift countermeasures from Beijing, including a 15% tariff on imports of US coal and liquefied natural gas products.
The Federation of Thai Industries warned the latest round of the US-China trade war will cause Chinese firms to avoid the US tariff by exporting goods to Southeast Asia.
Some manufacturers are dealing with the unpleasant prospect by adjusting their production to align with the growing market for food packaging and technology products where the demand is buoyant, said Mr Terdkiat.
Making plastics for durable goods to serve home furnishings and automobile markets is not good in terms of sales because demand for the products grows slowly due to weak purchasing power, he said.
Other challenges in 2025 include geopolitical conflicts that could cause energy prices and raw material costs to fluctuate as well as the US and EU's preparation for stricter environmental regulations that will lead to more import controls on products that emit high levels of greenhouse gases, covering petrochemical products and production chains, said Mr Terdkiat.
IRPC is taking action to cope with the downtrend of the petrochemical industry by focusing on developing innovative specialty products to meet high potential markets such as packaging, medical, electric vehicles and electronics.
Last year, the company produced added value petrochemical products through its 13-billion-baht Ultra Clean Fuel project by producing and distributing diesel that meets the Euro 5 emission standard and "jet A-1" aviation fuel that meets standards set by the international Joint Inspection Group.
The intensified competition from both oversupply from new production capacity and declining consumer demand affected the company's product price spread in 2024.
IRPC saw its revenue drop by 6% to 281.7 billion baht last year due to a 4% decrease in sales volume and a 2% decrease in average selling price in line with the fall in crude oil prices.
