S&P Global Commodity Insights continues to play a pivotal role at the Asia Petrochemical Industry Conference each year, where we engage with industry leaders to share our in-depth analysis of global petrochemical markets.

In this report, intended to coincide with APIC 2025, we assess implications for the sector of a potentially more uncertain trade environment while factoring in the global push toward greater sustainability. The focus is on Southeast Asia, and particularly Thailand, to examine how its chemical producers are responding to changing demand patterns.

Platts also examines changes in China's polymer trade flows and headwinds Southeast Asian chemical markets may face, given the specter of US-imposed tariffs and associated disruptions. We also explore India's chemical markets, which may prove to be relatively resilient amid potential regulatory measures and domestic factors. The report also covers developments within recycled plastics and low-carbon methanol in response to global sustainability initiatives, and new Platts assessments that address emerging market needs and enable price transparency.

Pile of very thick blue plastic pipe

Thailand faces feedstock challenge, eyes low-carbon, specialty products

Thailand's petrochemical industry will continue to be pressured throughout 2025 by weak margins due to high feedstock costs, particularly for naphtha, and a shift in demand patterns in the key export market of China driven by overcapacity.

The country has been moving to lighter feedstocks amid high naphtha prices in Asia for the last few years, an associated drop in olefins margins, and steam cracker shutdowns in the region. Thailand will also have to contend with China's increasing self-reliance in the conventional petrochemicals sector, and the initial response to this challenge has been a greater focus on the production of low-carbon and specialty products.

Feedstock challenge

Thailand has the largest petrochemical capacity in the ASEAN region, with an ethylene output capacity of 5.5 million mt/year in 2024, according to Sukanya Boonneung, executive director/chemical consulting at S&P Global Commodity Insights.

According to Boonneung, about 65% of the cracker feedstock in Thailand is liquid-based, and 34% is gas-based. The country’s gas-based crackers are under the PTT group and utilize locally sourced ethane and propane.

The use of liquid feedstock, namely naphtha, is not as cost-competitive as gas-based production in the US and Middle East, she added.

As a result, there have been indications recently of the industry rethinking its feedstock mix.

In March, Vopak NV announced plans to construct 160,000 cu m of new tank storage capacity at its tank terminal in Map Ta Phut by 2029 for higher imports of US ethane for PTTGC’s steam cracker.

SCGC recently signed a long-term agreement with Enterprise Products Partners LP to procure 1 million mt/year of ethane for its subsidiary LSP.

LSP had halted commercial operations at its petrochemical complex in Long Son Island in October 2024 amid negative margins, notably for ethylene. SCGC plans to invest in raising the ability of LSP’s 950,000 mt/year cracker to use ethane, propane, and naphtha.

SCGC has also signed a charter contract for five newbuild very large ethane carriers with Mitsui OSK Lines Ltd.’s affiliate MOL Energia Ltd., under which MOL will provide 15 years of logistics services transporting ethane from Enterprise Products in the US to Vietnam.

Shifting demand

Thailand will also be challenged by changing demand dynamics from China, historically a key destination for its petrochemical output.

About 50% of the petrochemicals Thailand produces is consumed domestically and 50% is exported, Boonneung said, adding Thailand is a large exporter of commodity polymers to other ASEAN countries and China.

“Historically, China was a key export market for commodity polymers from Thailand. However, with China increasing its self-sufficiency in commodity polymers, exports to China are decreasing and product margins are negatively impacted,” said Boonneung.

“China can make up the difference from its own production plants. China is actively expanding its petrochemical capacity to reduce reliance on imports, particularly for products like ethylene, polyethylene, and polypropylene.”

According to Boonneung, Chinese producers are also looking to invest in making petrochemicals and other products outside China.

Thailand is one of the target locations for Chinese players seeking to expand to the US and EU markets. Downstream investment by Chinese producers may boost demand for petrochemical products in Thailand, Boonneung said.

Plant restructuring

The falling demand in China and the rest of Asia, as well as a drastic oversupply on account of new production facilities across the region, have made the business environment in Thailand difficult, leading to several plant shutdowns and restructuring.

Thailand’s Ube Chemicals Asia Public Co. (UCHA) will stop producing cyclohexanone, caprolactam, and ammonium sulfate, and shut down one of two nylon polymers lines. Meanwhile, the Ube Fine Chemicals Asia Co. (UFA) subsidiary will end production of 1,6-hexanediol and 1,5-pentanediol.

Ube will maintain and expand its remaining businesses in Thailand. UCHA will make composites, and UFA will manufacture polycarbonate diol for high-performance coatings. Ube’s Thai Synthetic Rubbers Co. business will continue producing elastomers.

In December 2024, India’s Styrenix Performance Materials Ltd. acquired Ineos Styrolution affiliate Ineos Styrolution Thailand Co. Ineos Styrolution Thailand has an 85,000 mt/year acrylonitrile-butadiene-styrene plant and a 100,000 mt/year styrene acrylonitrile unit in Map Ta Phut. It also makes high rubber graft.

In October 2024, PTT Asahi Chemical Co. (PTTAC), a 50-50 joint venture between Asahi Kasei Corp. and PTTGC, terminated production at Rayong amid high feedstock costs and rising capacity in China. PTTAC produced acrylonitrile, methyl methacrylate, and ammonium sulfate and intends to dismantle its production facilities by 2028.

Focus on low-carbon, specialty products

Thailand is also seeing specialty products being prioritized to offset the weak demand and oversupply for conventional petrochemical products. Specialty chemicals traditionally have stronger demand growth because they are often niche products, innovative, and patented.

“Thai producers are looking for cost reductions and specialty product investments to survive in the long run. Key producers, such as PTTGC, SCGC, and IRPC plan to invest in specialty and low-carbon products,” said Boonneung.

These products include low-carbon polymers such as recycled plastics, biopolymers, and circular polymers, driven by global sustainability incentives. In March, Braskem Siam, a JV between SCGC and Braskem BSA, signed a letter of intent with Mitr Phol Bio Fuel, part of Thailand’s Mitr Phol Group -- ASEAN's leading ethanol producer -- to supply agricultural-based ethanol to produce bio-ethylene.

Braskem Siam will produce bio-ethylene for SCGC, which will use it as feedstock for bio-based polyethylene, which has a negative carbon footprint and is recyclable. It will be Asia's first bio-ethylene production plant, with a capacity of 200,000 mt/year, and is expected to be completed by 2027.

Next article

Credits: Akash Kumar Jain, Ashish Dhyani, Charlene Goh, Esther Ng, Fumiko Dobashi, Gustav Holmvik, Heng Hui, Kartik Kohli, Mainak Moitra, Nanda Lakhwani, Su Yeen Cheong, Thiam Hock Tan, Zhi Xuan Ho
Editing: Lead Editor: Adithya Ram. Other editors: Aastha Agnihotri, Ankit Ajmera, Manish Parashar, Ribhu Ranjan, Pollock Mondal
Design: CI Content Design