Plastics makers air concern over viability of naphtha plant

Local plastics manufacturers expressed their concern yesterday over the viability of the proposed naphtha cracker plant.

"The proposed naphtha cracker plant will never be viable because it needs a strong upstream and downstream industry," Philippine Plastics Industry Association Inc. president Alex Teng said.

He also said local plastic manufacturers have no intention of joining the consortium of investors for the naphtha cracker plant.

"First and foremost, for a naphtha cracker plan to be viable, it should have a minimum output production of one million metric tons," Teng said.

The proposed naphtha cracker plant is projected to have an output of only 600,000 metric tons.

"Second, the required naphtha raw material needed by the proposed plant is 1.8 million metric tons,"Teng said. The available local supply of naphtha is only estimated at below 900,000 metric tons.

Thus, the proponents of the naphtha cracker plant would still have to import another 900,000 metric tons.

Teng also disclosed that the Philippines faces strong competition from Middle East countries which are now able to harness cheap natural gas (a by-product of their oil refining operations) for their naphtha cracker plants.

The proposed naphtha cracker plant, Teng further pointed out, is expected to produce a number of products aside from ethylene and propylene which the local downstream industries only want.

The local downstream industries are expected to get only 70 percent of the production of the naphtha cracker plant while the remaining 30 percent would to go waste because there will be no takers for such products as toluene, benzene, etc.

"The expected domestic demand for the resins produced by the naphtha cracker plant, is only about 400,000 metric tons while the projected output of the plant is 600,000 metric tons," Teng said.

Lastly, Teng cited that there would only be one client of the proposed naphtha cracker plant since all the others have already shut down.

The last remaining petrochemical plant, JG Summit, Teng said, is located in Batangas while the proposed naphtha cracker plant is to be located in Bataan.

Normally, a fully integrated petrochem plant should be in one location.