SAPPORO, Japan (ICIS)–Asia’s petrochemical industry will need to further diversify its raw material base and portfolio of high-value added products, to cope with heavy capacity additions in other regions and amid recent developments in trade and climate change regulations, key regional industry officials said on Friday.APIC 2017 Asia petchems
“I believe that it is the time for the industry to seek extensive measures to diversify raw materials, build regionally diversified business portfolio and expand the portfolio into high value-added products, to be ready for the next round of global oversupply,” said Soo-Young Huh, chairman of the Korea Petrochemical Industry Association (KPIA), at the Asia Petrochemical Industry Conference (APIC).APIC 2017 Asia petchems
The two-day conference in Sapporo, Japan ends Friday.
“The industry should be gearing up for the second wave as new facility expansions was announced after record-setting high profits in the petrochemical industry for the past two years and extended low oil prices,” Huh said.APIC 2017 Asia petchems
A possibility of a prolonged low crude oil environment due to unconventional shale oil and gas extraction also presents a challenge to the Asian petrochemical industry.
“We are now faced with growing uncertainties and difficulties, including aggressive measures taken by the new US administration, strengthened protectionism of G2 nations [US and China], global political and economic issues including Brexit [British exit from the EU],” Huh said.APIC 2017 Asia petchems
New environmental regulations in line with the Paris Agreement on climate change would also have a bearing on Asia’s petrochemical industry, according to industry officials.
“Today, regulatory and social trends around sustainability create both pressures and opportunities for us, petrochemical producers, in the markets that we operate in and sell to,” said Akbar Thayoob, president of the Malaysian Petrochemicals Association.
Japan Petrochemical Industry Association (JPIA) chairman Tsutomo Tannowa said he anticipates an influx of petrochemical products from shale gas in the US; from coal chemicals technology in China; and from ethane gas in the Middle East, coming to the Asian market.APIC 2017 Asia petchems
In its country report released at APIC, JPIA said that Japan’s petrochemical manufacturers, especially crackers and derivative plants, need to increase their cost competitiveness to face these challenges.APIC 2017 Asia petchems
To ensure sustainability in the long run, petrochemical industry players will also need to play a leading role to develop “remarkable innovations” to combat climate change, especially with the signing of the Paris Agreement on climate change last year, he said.
“Ultimately, we wish to discover innovation that utilises CO2 [carbon dioxide] itself,” Tannowa said.APIC 2017 Asia petchems
Near term, the business environment in the petrochemical industry is “generally favourable” amid solid economic growth in Asia and high cracking margins due to low crude oil prices, Tannowa said.
“It is important to make profits. Without them, it would be impossible to finance long-term consistent R&D [research and development] efforts for innovation and that in turn would betray the expectations for chemistry and put the future of humanity at risk,” he said.
Carbon chemistry plays an important role in the search for solutions to environmental problems and the lack of water resources, according to Bao-Lang Chen, chairman of the Petrochemical Industry Association of Taiwan (PIAT).APIC 2017 Asia petchems
Extreme climatic conditions, for example, increase the demand for high performance and environmentally friendly materials, such as smart food packaging and nano coatings used for anti-corrosion, heat resistance and insulation, Chen said.
“Companies in Asia … see the need to embrace the development of manufacturing technology to create and innovate future growth platforms using alternative feedstock, intelligent materials and the latest environmental technologies to sustain and keep up with the increasing demand of chemicals around the world,” said Suiniaty Basirun, chairperson of the Singapore Chemical Industry Council (SCIC).APIC 2017 Asia petchems
In the case of Singapore, the country is positioning itself for the next phase of growth in the energy and chemical industry by aiming to be a role model for sustainable development, Basirun said.
“At the plant level, companies are doing their part in reducing carbon footprint and adopting energy efficient methods,” she said.
Focus article by Nurluqman Suratman
Picture: Panel of Asian petrochemical industry officials at APIC 2017 in Saporro, Japan.
From left: Tsutomo Tannowa (Japan), Soo-Young Huh (Korea), Bao-Lang Chen (Taiwan), Akbar Thayoob (Malaysia), Ekarat Thongtawach (Thailand), Suiniaty Basirun (Singapore) and Kamal Nanavaty (India)