New naptha cracker to boost Philippine petrochemical industry

Mario Jose Sereno, executive director of the Association of Petrochemical Manufacturers of the Philippines, however, said the government should now act on a petition it filed for higher tariffs on imported resins prior to the operation of the cracker. Mr.  Sereno said tariffs on polymers such as polypropylene (PP) and polyethylene  (PE) should be reverted to 15 percent from the existing 10 percent as provided by Executive Order 61.

He said that the order provides that tariffs should go back to 15 percent when a cracker shall have been operational or a  similar technology is in place. He added that such technology for backward integration is now in place via Philippine Propylene Corp., an affiliate of Petron Corp. which produces PP using raw materials from Petron’s fluid catalytic cracker in Bataan.

Today, Philippine plastic manufacturers import half of their polymer requirements and half is sourced locally. More  raw materials (monomers) would be produced locally and existing PP and PE plants can jack up capacity utilization after JG Summit’s plant starts operating. The plants have a capacity of 1 million metric tons but operate at only 50 percent.  Local requirement for polymers is placed at 1 to 1.5 million MT.

JG Summit’s cracker is set for commercial operation in the fourth quarter next year with actual commercial operation by the first part of 2014. The facility will have a combined capacity for PP and PE of 500,000 MT of which 400,000 ton is targeted for the local market and the rest for export  to Vietnam and China.