Petrochemical cycles are usually between six and eight years and growth and decline does not vary more than 25 per cent in one whole cycle.

Piti Yimprasert, chief executive of Integrated Refinery Petrochemical Complex - formerly Thai Petrochemical Industry - said the sector would not shrink as some analysts had predicted. He put its steady nature down to huge demand in China, which is growing between 8 per cent and 10 cent a year.

Oil prices are a key factor and these are expected to be between US$50 (Bt1,790) and $60 a barrel this year. This will reduce costs.

According to Dow Chemical chairman and chief executive Andrew Liveris, the global petrochemical business will continue growing this year thanks to demand in many countries, particularly China, and construction delays at new crackers in the Middle East.

He added new crackers in the Middle East and China would commence production in 2010, leading to a decline in growth over the coming three years.

On the other hand, Cementhai Chemicals president Cholanut Yanaranop said the gap between raw-material costs and some product values might decrease by $80 to $90 thanks to increased supply from new crackers in Iran and the Middle East.

He said the global production of ethylene this year would increase to 5.8 million tonnes, up from 4 million tonnes last year.

In addition, the company expects the plastic pellet market to slow in the early part of the year due to lower oil prices and the recommissioning of olefins plants in Asia following maintenance.

Thai Oil managing director Viroj Mavichak said refinery margins were forecast to remain between $5 and $6. Margins reached $10 to $12 last year due to hurricanes, but he does not foresee similar events in 2007.

Piti said if refinery margins were around $5 there would be no new plants built this year. If they reached $8 to $10 then investors would be tempted to put money into new plants.

Board of Investment secretary-general Satit Chanjava-nakul said both local and foreign investors would spend several tens of billions of in the petrochemical industry this year. These include Dow Chemical, Thai Oil and PTT Chemical.

He added that investors were interested in Thailand's petrochemical complexes at Map Ta Phut rather than other Southeast Asian destinations.

The industry is one of six expected to post record foreign direct investment this year, Satit said. The others are electronics, automobiles and automotive parts, the agro-industry, alternative energy and the service sector.

Chalida  Ekvitthayavechnukul

The Nation