The spread between petrochemical products and raw material The spread between Polyolefins group and Naphtha • HDPE Spread - Lower: HDPE - Naphtha spread in 2022 was USD 457 per ton decreasing by 29% from that in 2021 of USD 641 per ton as demand was still weak due to China’s lockdown measures, which hampered the construction industry as well as several pipeline projects. Meanwhile, some producers reduced production capacity to preserve profit levels. HDPE - Naphtha spread in 4Q22 was USD 442 per ton increasing by 5% when compared to USD 421 per ton in 3Q22. This was because market expected demand recovery after China prepared to announce the reopening early next year. However, overall demand in this quarter remained sluggish due to a slowdown in downstream demand, especially from large construction projects resulting from high inflation and rising interest rates. • PP Spread - Lower: PP - Naphtha spread in 2022 was USD 407 per ton decreasing by 38% from that in 2021 of USD 655 per ton owing to concerns about the world economy leading to the softer demand for end products. In addition, raising interest rates and strict financial measures of banks in major markets such as Vietnam and Indonesia restrained consumer purchasing power. Moreover, China’s Zero-COVID policy caused the demand in China to remain weak, while many producers reduced their production rates to keep up with the dwindling market demand. PP - Naphtha spread in 4Q22 was USD 322 per ton decreasing by 12% when compared to USD 367 per ton in 3Q22.This was owing to the global economic slowdown causing the demand for end products to decrease despite a manufacturing season for serving consumption during the New Year Festival. In addition, the Chinese government’s persisting Zero-COVID policy, along with the policy rate hike and stringent credit measures in many countries resulted in the continually stagnant demand for end products. The spread between Aromatics group and Naphtha • TOL and MX Spread - Higher: In 2022, Toluene - Naphtha spread and Mixed Xylene -Naphtha spread were USD 175 per ton and USD 239 per ton respectively rising by 111% and 130% when compared with those in 2021. This was mainly caused by improving PX market sentiments, which resulted in the increasing demand for Toluene and Mixed Xylene, the major raw materials being used in PX production. In 4Q22, Toluene - Naphtha spread and Mixed Xylene - Naphtha spread were USD 188 per ton and USD 241 per ton respectively, down by 27% and 17% accordingly when compared with those in 3Q22. This was due to stagnant demand while supply increased as India announced a limit on imports and encouraged domestic consumption. In addition, declined Gasoline spread and lower PX production constrained Toluene and Mixed Xylene demand for conversion to Gasoline and PX. The spread between Polystyrenics group and Naphtha • ABS Spread - Lower: ABS - Naphtha spread in 2022 was USD 901 per ton decreasing by 47%when compared to USD 1,713 per ton in 2021. This was because the ABS market situation weakened from that last year when the ABS market situation was outstanding. This year, consumer demand was limited by rising inflation rates affecting end demand for durable goods including electrical and electronic appliances. Additionally, China’s Zero-COVID policies led to periodic lockdowns in many major cities resulting in both labor shortages and strikes, particularly in the electronic industry, which interrupted some production. ABS - Naphtha spread was USD 695 per ton in 4Q22, down by 13% when compared to USD 799 per ton in 3Q22. Demand did not recover seasonally caused by a rise in global inflation leading end customers to delay the order. Besides, Chinese government’s Zero-COVID policy and worker protests in the electronics sector disrupted production. Meanwhile, Asian producers continued to reduce production due to dropped production margins as rising costs. 56-1 One Report 2022 180 IRPC PUBLIC COMPANY LIMITED
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