MARKET ANALYSIS

INTRODUCTION
Market analysis is an activity of gathering information quantitatively and qualitatively that
can be beneficial to current and future project operation. The purpose of this market analysis is to
determine either the production of polypropylene is profitable or not. It determined by analyzing
the supply and demand for polypropylene domestically and globally. Market analysis also provide
information about foreign and local competitors. The information helps in deciding quantity of the
polypropylene production and to identify potential market. Therefore, the capital cost and
manufacturing cost to start new plant facility for polypropylene process production will be
determined through this chapter.

POLYPROPYLENE IN INDUSTRY
The domestic and global polypropylene consumption are largely dependent on the
availability of the raw materials and by the end user. Based on the most recent information, global
production of polypropylene reach 70 million tons in 2017. The value estimated to reach 80 million
tons in 2025. Polypropylene is an important raw materials to be used in the application of injection
molding, blow molding, extrusion, fiber and film. Figure below show the consumption of
propylene for certain application in 2005.

Global consumption of polypropylene by end use application

Injection moulding
3%
0%
7%2% Fiber
Film
17% 39%
other extrusion
Blow mouding

33% Extrusion coating

All other

Source: American Journal of Polymer Science

 Propylene continues to be used in end-use industry such as packaging, automotive, building
and construction, electrical and electronics and medical. The largest consumer for polypropylene
is packaging industry due to the beneficial properties of the polypropylene such as high impact
resistance, good optical property, flexibility, low sealing threshold and availability at competitive
price. All these properties help polypropylene replace metals, cellophane and paper in the
packaging industry. Figure below shows the demand of polypropylene for end-use sector comes
from packaging industry in 2013.

DEMAND OF POLYPROPYLENE FOR END-USE SECTOR

Others Packaging
31% 31%

Household Electrical sector

10% 14%
Construction
5% Automotive
9%

Source: Global Demand, Capacity and Prices for Polypropylene- End Use Sectors in Asia-
Pacific to Drive Growth
WORLD DEMAND AND SUPPLY FOR POLYPROPYLENE

World total trade

25000000

20000000
Quantity (ton)

15000000

10000000

5000000

0
2015 2016 2017
Year

Export Import

Source: Department of Statistic Malaysia

Supply for polypropylene gradually increase from year to year. 12924887 tons of
polypropylene is exported globally in 2015. The number increase to 13251654 tons in 2016 and
13876484 tons in 2017. South Korea is the largest supplier by exporting polypropylene to other
countries at average 1500000 tons per year. This is due to the strategic location of South Korea
near with China that ease the transportation process. Export of polypropylene from Europe
countries is conquered by Belgium and Germany with export quantity at average 1 million tons of
polypropylene per year. United State share the same value of export quantity with Belgium and
Germany by supplying polypropylene throughout the world at average 1 million tons per year.
Singapore lead other Southeast Asia countries by exporting 952499 tons propylene in 2015 and
increase to 1 million tons in 2017. It can be seen that Singapore is the closest competitor for
Malaysia in supplying and marketing polypropylene. Demand for polypropylene are inconstant
from 2015 to 2017. The data shows that numbers of imported polypropylene increase from
16686409 tons in 2015 to 20540030 tons in 2016. However the value drop to 17335619 tons in
2017. China leads other countries by importing polypropylene at average 3 million tons per year.
Indonesia leads other Southeast Asia countries by importing 596971 tons propylene in 2015 and
increase to 723392 tons in 2017. It can be seem that demand for polypropylene is high in Indonesia
compared to other ASEAN countries.

Global Polypropylene Price

12000

10000

8000
Price (RM)

6000

4000

2000

0
2015 2016 2017
Year

Import Export

Figure above shows the global polypropylene price for polypropylene in Malaysian ringgit per ton.
Price of imported polypropylene at average RM 5180 per ton in 2015. However, the value drops
at average RM 4043 per ton in 2016. This may due to high demand and low supply for
polypropylene. The price for polypropylene gradually increase at average RM 5482 per ton in
2017.
SUPPLY AND DEMAND FOR POLYPROPYLENE IN MALAYSIA

Total Trade Polypropylene in Malaysia

485000
480000
475000
470000
Quantity (ton)

465000
460000
455000
450000
445000
440000
435000
2015 2016 2017
Year

Import

Source: Department of Statistic Malaysia

The supply of polypropylene from Malaysia to other countries increase from 381996 tons
in 2015 to 383671 tone in 2016. However, the amount is slightly decrease in 2017 which is 305530
tone of polypropylene supplied from Malaysia to the world. Average quantity of polypropylene
supplied from Malaysia to other countries is 357056 for the year 2015, 2016 and 2017. Demand
of polypropylene of other countries from Malaysia increase due to drop in Malaysia ringgit
currency. The decreasing in propylene supply from Malaysia to other countries is an impact of
slow growth of petrochemical industry in Malaysia. Most of the polypropylene is supplied to the
Asia region including China, Vietnam, Bangladesh, Indonesia and Myanmar. Almost quarter of
polypropylene produced in Malaysia is supplied to China. The average quantity of polypropylene
supplied to China from 2015 to 2017 is 111916 tons per annum. The polypropylene demand in
China play a significant factor in contributing the supply growth for Malaysia. The second largest
quantity being supplied is to Indonesia. The average value of propylene supplied to Indonesia is
30 thousand tons. However, the quantity of polypropylene to Indonesia decrease from 2015 to
2017.
 The demand of polypropylene for Malaysia from other countries gradually decrease from
2015 to 2017. The quantity of polypropylene imported decrease from 479466 tons in 2015 to
472712 tons in 2016 and to 451016 tons in 2017. Most of the polypropylene is imported from
Saudi Arabia, Singapore, Thailand, South Korea and United State. More than half of the propylene
overall quantity is imported from Saudi Arabia with average quantity three hundred thousand tons
per year.
Major production of polypropylene comes from PETRONAS and Lotte Chemical Titan.
The plant facilities to produce polypropylene is located at Gebeng, Pahang for PETRONAS while
for Lotte Chemical Titan is located at Pasir Gudang, Johor. Based on Malaysia Petrochemical
Country report in 2016, the quantity of polypropylene production is at average 400 ktpa from 2013
to 2017. The capacity is expected to increase to 600 ktpa in 2018 and 2019. The production
capacity is expected to increase to 1500 kpta in 2020. This is due to new RAPID petrochemical
project by PETRONAS and Lotus Chemical Titan start its third polypropylene line with capacity
200 ktpa. Graph below shows the polypropylene capacity in kilo ton from 2013 from 2020.

Malaysia Polypropylene Capacity

1600

1400

1200
Quantity (kilo ton)

1000

800

600

400

200

0
2013 2014 2015 2016 2017 2018 2019 2020
Year

Source: Malaysia Petrochemical Country Report in 2016

According to the report, the export quantity is expected to be increase from average 300 to
400 kpta to 800 kpta in 2020. The local demand for polypropylene also increase from 500 kpta in
2016 to 600 kpta in 2020. Graph below show the trend and forecast study of local demand for
polypropylene in Malaysia and quantity exported to several countries.

Malaysia Polypropylene
700
600
Quantity (kilo ton)

500
400
300
200
100
0
2015 2016 2017 2018 2019 2020
Year

Demand

Source: Malaysia Petrochemical Country Report in 2016

Current polypropylene production in Malaysia does not enough to fulfill local demand and
export quantity. Due this problem, import of polypropylene from other countries to Malaysia is
high. Based on current trend and forecast study of demand and supply of polypropylene, the plant
with capacity of 170 kpta polypropylene is optimum enough to export polypropylene to other
countries and fulfill local demand. It is also making a good competitive with PETRONAS and
Lotte Chemical Titan.
 Price for Imported and Exported Polypropylene in
Malaysia
12000

10000 4494 4642

4236
8000
Price (RM)

6000
5182 5148
4670
4000

2000

0
2015 2016 2017
Price

Import Export

Source: Department of Statistic Malaysia

The figure above shows the average price in Malaysia ringgit for Malaysia polypropylene
supply and demand. 381996 tons of the polypropylene is being exported worldwide with overall
price RM1716612979.00. Price per tons of polypropylene for the year 2015 is RM4494.00 per ton.
In the year of 2016, 383671 tons of the polypropylene exported worldwide with overall price
RM1625085688.00. However the price of polypropylene that being exported decrease to
RM4236.00 per ton. The price of exported polypropylene slightly increase to RM4646.00 per ton
in 2017. It can be said that the price for polypropylene that being exported is between four to five
thousands per ton.
The price for polypropylene that being imported from other countries to Malaysia show
the same trend with the exported polypropylene price. 479466 tons of polypropylene imported to
Malaysia with price RM5182.00 per ton in 2015. The price of imported polypropylene decrease to
RM4670 .00 per ton in 2016. The price of the polypropylene increase to RM5148.00 per ton in
2017. The price for imported polypropylene also can be stated within average four to five thousand
per ton. The statistic shows that price to import and export polypropylene are not same for each
different years. It depends on exporter country and Malaysia currency and petrochemical economy
growth.
RAW MATERIALS
1. Propylene
Propylene is a monomer for the polymerization of polypropylene. The propylene either can be
brought from local company or imported for other countries. Almost 900 thousand metric ton per
year of propylene being produced by Titan Petchem M Sdn. Bhd, Ethylene Malaysia Sdn. Bhd and
Optimal Olefins (M) Sdn. Bhd.

Price for Imported Propylene

5000
4500
4000
3500
3000
Price (RM)

2500
2000
1500
1000
500
0
2016 2017 2018
Year

Source: Department of Statistic Malaysia

Propylene price is inconsistent throughout the year. Price of imported polypropylene increase from
RM 2,867.97 per ton in 2016 to RM 4,564.68 per ton in 2018. The propylene is imported from
Singapore, Indonesia, United States, South Korea and Germany.
2. Ethylene
Global production of ethylene is constantly increase from 2013 to the end of year of 2017. The
ethylene production increase from 130 million ton in 2017 to 150 million ton in 2017. According
to the forecast study, the production of ethylene will increase to 170 million ton per year at the end
of 2021. The total production divided into any regions which are North America, West Europe,
NE Asia, Africa, South America, Central Europe, India, SE Asia, CIS and Baltics and Middle East.
Table below the statistical data for world ethylene production.
 World Ethylene Production
180
160
140
Quantity (million ton)

120
100
80
60
40
20
0
2013 2014 2015 2016 2017 2018 2019 2020 2021
Year

World Ethylene Production

Source: HIS
The price of ethylene is RM4470.49 per ton in 2016 and increase to RM4895.61 per ton in
2017. The price is continuously increase in 2018 with price RM4912.33 per ton. Most of the
ethylene are imported from China, United State, Thailand, Singapore and Egypt. The production
of ethylene in Malaysia is estimated to 1.63 million tons per year. Ethylene is produce by Titan
Petchem (M) Sdn. Bhd, Ethylene Malaysia Sdn. Bhd and Optimal Olefins (M) Sdn. Bhd. Plant for
ethylene processing located at Kertih, Terengganu and Pasir Gudang, Johor.

Ethylene price
5000
4900
Price per ton (RM)

4800
4700
4600
4500
4400
4300
4200
2016 2017 2018
Year
 Source: Department of Statistic Malaysia

3. Hydrogen
Hydrogen demand is dominated by the ammonia, oil cracking and methanol industries. Production
or hydrogen be divided into two categories which are captive and merchant hydrogen. Captive
hydrogen is produced and consumed by the same company while merchant hydrogen is produced
by one company to sell to another company. Captive hydrogen mostly dominated by ammonia
industry. Almost 30 million metric ton of hydrogen is produced from the ammonia industry in
2014. Methanol industry is second largest captive hydrogen industry and followed by oil cracking
industry. Methanol industry produce almost 15 million metric ton of captive hydrogen in 2014
while oil cracking produce 10 million metric ton for the same year.
Merchant hydrogen are mostly produced from steam reforming of natural gas and other
process by product. The production of merchant hydrogen is predicted to continue its rapid growth
based on ongoing construction of new hydrogen plant. In 2014, the merchant hydrogen capacity
approximately 7.3 billion standard cubic feet per day (BSCFD). The graph below shows world
hydrogen supply from 2010 to 2014 in million metric ton.

World Hydrogen Supply

18
16
14
Quantity (million ton)

12
10
8
6
4
2
0
2010 2011 2012 2013 2014
Year

By-product Captive Merchant

Source: Hydrogen Supply and Demand: Past, Present, and Future

 The major players in supplying merchant hydrogen are Air Products, Air Liquide, Linde,
and Praxair. All the companies mostly supply merchant hydrogen to the Asia, Europe and North
America regions. Table below shows the capacity of merchant hydrogen provide by the
companies:
Quantity in Million Standard Cubic Feet per Day
Company Europe Asia North Rest of the Totals
America world
Air 704 664 744 31 2143 22%
Liquide
Air 231 376 2938 5 3550 36%
Product
Linde 589 196 486 94 1365 14%
Praxair 12 169 1972 12 2165 22%
Others 53 146 135 270 607 6%
Total 1589 1554 6257 412 9830
Source: Hydrogen Supply and Demand: Past, Present, and Future

The hydrogen plant for Air Liquide, Air Product and Linde are also located in Malaysia.
Air Products built new hydrogen facilities at West Port Selangor, in 2011. Other hydrogen facilities
owned by Air Product located at Kuantan and Banting. Price for hydrogen in Malaysia was
inconsistent from 2013 to 2017. The highest price was USD 61.39 per m3 in 2016 the lowest was
USD 5.75 per m3 in 2017. By converting to current Ringgit Malaysia currency, the highest and
lowest price were RM 255.57 and 23.94 per m3. Graph below shows the trend for hydrogen price
for Malaysia from 2013 to 2017 in Ringgit Malaysia per m3:
 Price of Hydrogen
300

250
Price per m3 (RM)

200

150

100

50

0
2013 2014 2015 2016 2017
Year

Source: Department of Statistic Malaysia

4. Catalyst
Demand for polyolefin catalyst increase at 4.8% for every year. Rise in polyolefin demand in
response to higher polymer global production. Demand for polymer catalyst are strong in Asia and
Middle East regions. In 2013, global demand was 6,259.3 kilo tons and is projected to reach
7,803.4 kilo tons with a compound annual growth rate of 3.2% from 2014 to 2020. Metal catalysts
demand was 1,568.4 kilo tons in 2015. Metals such as nickel, copper, chromium, molybdenum,
palladium, platinum, gold, ruthenium, and rhodium are used as catalysts for enhancing reaction
rate in chemical processing, refining, and polymer production.