Philippine petrochemical producer JG Summit is expected to shut all its petrochemical assets indefinitely after its recent decision to halt operations at its petrochemical complex until the end of the first quarter of 2025.
The producer formally informed its employees on potential layoffs in a townhall meeting on 24 January.
Operations at Peak Fuel — the producer's wholesale LPG trading arm — will continue to cater for domestic fuel demand.
The producer plans to shut its naphtha cracker and downstream polyethylene (PE) and polypropylene (PP) plants in mid-December 2024 to end-March 2025 because of profitability concerns, it announced in November.
JG Summit operates a naphtha cracker, which can produce up to 480,000 t/yr of ethylene and 240,000 t/yr of propylene. It also operates a 70,000 t/yr butadiene extraction unit and an aromatics unit with output capacity of up to 90,000 t/yr of benzene, 50,000 t/yr of toluene and 30,000 t/yr of mixed xylenes.
Its downstream polymer assets include a 300,000 t/yr PP plant, a 160,000 t/yr linear low-density polyethylene (LLDPE) plant, a 160,000 t/yr high-density polyethylene (HDPE) plant and its newest 250,000 t/yr PE plant, which only began operations around July/August 2024.
Its 300,000 t/yr PP plant has been shut since late December 2024-early January 2025. Its 570,000 t/yr PE capacities will be shut by the end of this month. The producer will continue to supply polymer resins to its domestic customers until its inventory is depleted.
Philippines consumed around 170,000 t/yr of LLDPE, 240,000 t/yr of HDPE and around 440,000 t/yr of PP in 2024, according to Argus' estimates. The nation will be fully reliant on PE and PP imports after the indefinite closure of JG Summit's petrochemical complex.
Challenges for SE Asian producers
Southeast Asian polymer producers have been facing strong competition from imported resins and struggled with weak profitability since 2022.
PE and PP capacity additions in China since 2020 have led to oversupply of resins and strong global competition, weakening polymer production margins.
Chinese producers have been exporting PP to the global markets since 2021. The southeast Asian market is one of its main export outlets. China also achieved a PP self-sufficiency rate of around 95pc in 2024, up from 93pc in 2023, according to Argus estimates.
A lack of feedstock cost advantage when compared with producers in the Middle East and US led to weak margins for southeast Asian producers as they compete to retain regional market shares.
The indefinite shutdown by JG Summit — the sole PE producer in the Philippines — is expected to further tighten the availability of duty-free PE and PP supplies in the domestic market and the wider southeast Asian market in 2025.
Philippine refiner Petron has kept its 160,000 t/yr PP plant off line throughout 2024 and the plant will remain shut for an unspecified period, likely because of weak margins.
Vietnam's Long Son shut its new petrochemical complex in Ba Ria-Vung Tau in mid-October 2024 because of similar profitability concerns. The producer is expected to halt operations at its polymer plants until at least the end of first-half 2025 and anticipates slow margin recovery. But the restart of these plants will depend largely on market conditions, according to market sources.
Malaysian petrochemical producer Lotte Chemical Titan has also shut its No. 1 290,000 t/yr naphtha cracker and likely reduced production of selected PE and PP grades from mid-December 2024 to mitigate production losses. The restart timeline is unclear.
