(Unit: USD/Ton) Source: ICIS ABS HDPE Film PP Yarn GPPS Naphtha The Prices of Petrochemical Products and Polymers 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan. 23 Feb. 23 Mar. 23 Apr. 23 May 23 Jun. 23 Jul. 23 Aug. 23 Sep. 23 Oct. 23 Nov. 23 Dec. 23 As shown in the above diagram, prices of almost all types of products were in decline throughout the year, particularly in Q2, tracking the fall in prices of crude oil and naphtha. This was brought about also by the weaker than expected recovery in demand in the world market at a time of supply glut as the result of new production capacity being added to the market from early 2023. Prices began to pick up gradually in Q3 from stabilized feedstock cost and a slight increase in demand in the lead up to the seasonal production phase for year-end festivities of 2023. However, the price increase was moderate due to the continued oversupply in the market as producers of finished products were unable to pass on increased costs to the consumers who still felt the pinch of reduced purchasing power. Such difficult situation posed greater challenges to petrochemical producers. The share of feedstock cost in total production costs remained subdued and below the levels of 2022 as prices of petrochemical products and plastic pellets decreased at a higher rate than the prices of feedstock. Most producers had to keep production output and inventory levels at optimal levels to maintain profit margins. 2024 Petrochemical Industry Outlook In 2024, the petrochemical and plastic pellet industries are expected to face the same challenges that trace back to 2022. New production capacity will continue be added, especially in the China market, while demand grows at a slower pace. The demand for petrochemical products and plastic pellets is expected to grow by approximately 2-3 percent in 2024 compared to the previous year. That, benefiting from the low base effect. The recovery in global demand will be gradual and become more pronounced in the latter half of the year. Inflation in most countries have started to retreat and central banks are expected to begin adjusting monetary policy by gradually reducing the policy interest rates. Appetite for investment will grow among businesses, enabling consumers to regain their purchasing power. 81 Structure and Business Operations of IRPC 56-1 ONE REPORT 2023
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