The floods in Thailand in 2011 were the worst in 50 years and had a temporary and limited immediate effect on the petrochemicals industry’s activities, according to BMI’s latest Thailand petrochemicals report. Port closures have prevented Thai petrochemicals exports from getting to market, while port congestion – due to damage to port infrastructure and factory closures causing logistical delays – have also had a major impact. This is particularly worrying, given our medium-term concerns over the potential of the export sector. Moreover, over 1,200 factories were closed in 33 provinces, denting local petrochemicals consumption.
Among the plants that were closed were Indorama Ventures’s PET facilities in Lopburi province; Teijin’s Teijin Polyester Thailand (TPT) subsidiary located in Klong Luang, Pathum Thani Province, which manufactures and sells polyester filament yarn (PFY), staple fibre (PSF) and industrial fibre; Teijin Thailand in Bang Pa-in Industrial Estate, Ayutthaya Province, which manufactures and sells PFY and PSF; Teijin Cord Thailand located in Rojana Industrial Park, Ayutthaya Province, which manufactures and sells core materials used in machine transmission belts; Toray Industries’ Thai Toray Synthetics (TTS) subsidiary’s plant in Ayutthaya, which produces nylon yarns for industrial use and polyester yarn for clothing and TTS’s operations at its Bangkok nylon and polyester yarn plant. Many of the affected petrochemicals plants were due to come back into operation by Q212. The main site for Thai petrochemicals production, Map Ta Phut in Rayong Province, escaped unscathed from the flooding.
BMI expects the country to regain momentum as the production and export hub for petrochemicals products, serving a range of industries including the construction, automotive, consumer durables and packaging sectors. Thailand's real GDP growth is estimated to have come in at 1.5% in 2011, as high base effects kick in and the inventory restocking cycle winds down. Private consumption will be the main driver of growth, contributing 2.6pp to headline expansion in 2012.
Downstream industries such as electronics and automotive producers were most affected by the floods. The production facilities of Japanese automakers Honda Motor Corp and Toyota Motor Corp were among those affected by the flooding in areas surrounding Bangkok. The automotive industry is an important pillar of demand for petrochemicals and is also a large end-market for materials such as PP, nylon, ABS, PU, rubber, paints and coatings.
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