Petrochemical Market and Situation The petrochemical industry in 2023 as a whole saw a slight increase in demand of about one percent, which was attributed to a number of factors. To begin with, the Russia-Ukraine war dragged on, global inflation stabilized at a high level. As a result, central banks around the world continuously increase their policy interest rates, which, in turn, dampened global economic expansion. In particular, the Chinese economy did not fully recover as anticipated by the market even after Beijing changed its approach from zero-COVID policy to adapt and coexist with the virus, the reopening of China for inbound and outbound tourism notwithstanding. The Chinese economy was also weighed down by real estate crisis that threatened to get worse. Economic stimulus packages introduced by the Chinese government failed to achieve intended results. Chinese consumer confidence has not been restored and people were cautious in their spendings. Loss of purchasing power among global consumers led to sluggish global demand for consumer goods, especially durable consumer goods which then had a knock-on effect to the manufacturing and export sectors. Nevertheless, the lifting of travel restrictions in Thailand and elsewhere helped revive the service sector, particularly tourism and related businesses, which registered sustained growth, shoring up demand from certain sectors of the economy, including food packaging and industries relating to personal health, hygiene and medical equipment, etc. On the supply side, Asian markets were under pressure as new production capacity kept entering the market in 2022-2023, particularly in China, Vietnam, Indonesia, the Middle East, as well as in Thailand. This led to supply glut concerns in the region that put pressure on prices. Many petrochemical producers have chosen to cut production to try to restore balance in the market. At certain periods, due to extremely narrow profit margins, made worse by costs of energy and feedstocks hovering at elevated level, many producers also had to further reduce output. Prices of petrochemical products and plastic pellets in 2023 were down by approximately 15-20 percent from the previous year. The average price for polypropylene (PP) averaged at USD 987 per metric ton, while high-density polyethylene (HDPE) stood at USD 1,127 per metric ton. Price of standard-grade polystyrene (PS) was USD 1,216 per metric ton, while average price of ABS pellets dropped to USD 1,320 per metric ton, representing the steepest decrease of about 22 percent. Price of naphtha fell by approximately 16 percent, which resulted in the gross margin settling at a low level as in 2022. 80 Structure and Business Operations of IRPC IRPC Public Company Limited
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