Business News | South, South-East Asia Petrochemical Market Faces Weak Outlook Amidst Slower Growth and Oversupply
Get latest articles and stories on Business at LatestLY. According to Fitch Ratings, this projection is driven by factors such as uncertain Chinese demand, a broader slowdown in global growth, and a prevalent oversupply of petrochemical products in the region.
New Delhi [India], January 15 (ANI): Fitch Ratings projects a persistently weak outlook for the petrochemical market in South and South-East Asia throughout 2024.
According to Fitch Ratings, this projection is driven by factors such as uncertain Chinese demand, a broader slowdown in global growth, and a prevalent oversupply of petrochemical products in the region.
While a reduction in new capacity additions post-2024 and lower energy costs may provide some support, the overall market conditions are expected to remain challenging.
One of the primary contributors to the subdued market scenario is the uncertainty surrounding Chinese demand, a significant player in the petrochemical industry.
Weaker global growth further exacerbates the challenges, influencing the profitability of petrochemical markets in the region.
The oversupply situation persists as large petrochemical-producing countries aim for self-sufficiency and diversification, even in the face of weakened demand growth.
Fitch Ratings anticipates that the spreads over naphtha for key petrochemical products, specifically polyethene and polypropylene, will hover in the range of USD 300-400/tonne in the near term.
This is significantly below the six-year average of USD 438/tonne and USD 512/tonne, respectively. The pressure on demand and the existing supply overhang are identified as key factors contributing to this scenario.
The forecast highlights the challenges faced by companies operating in this market, emphasizing the importance of feedstock volatility management.
Fitch predicts that feedstock volatility will persist in 2024, influenced by political uncertainties and OPEC+ policy dynamics.
Additionally, the shift towards electric vehicles is expected to impact transportation fuel demand, adding another layer of complexity to the industry landscape. Companies capable of adapting to various feedstocks and effectively managing their product mix are expected to fare better in terms of cash flow stability.
This adaptability becomes crucial in navigating the uncertainties arising from political and policy changes, ensuring a more resilient position in the volatile market. While acknowledging the challenging conditions, Fitch Ratings indicates that a reduction in new capacity additions and lower energy costs could offer a degree of relief.
However, the petrochemical market in South and Southeast Asia remains in flux, requiring industry participants to remain vigilant and adaptable to navigate the evolving landscape throughout 2024. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)