It was, however, not a completely negative picture. The coming year could be quite hard on the petrochemical industry. The cutbacks were the result of lack of demand. The slowdown in the growth of regional demand would prevent producers from fully passing on to buyers the increase in the cost of raw materials such as naphtha. An economic slowdown in China, the region's main importer, would be particularly devastating.
China imports about a quarter of the polyolefins that are traded worldwide.
Further adding to the industry's woes is an expected increase in the supply of petrochemicals. In Singapore, ExxonMobil is in the start-up phase of its new petrochemical complex built around an ethylene cracker with an annual capacity of 800,000 metric tons. Saudi Yanbu Petrochemical, a joint venture between Sabic and ExxonMobil, is also starting a petrochemical complex in Saudi Arabia, and it features a cracker of the same size as the one at the Singapore facility. And after much delay, Taiwan's Formosa Plastics is also coming on-line with its second cracker at Mailiao, a facility with an annual production capacity of 900,000 metric tons. As the overall outlook deteriorates, there are a few bright spots in the prospects for the region's chemical industry.