The Indonesian petrochemicals market will see robust growth throughout the next five years. However, this quarter we have revised down our 2015 forecast for the automotive industry, which is set for a contraction due to poor domestic sales and this will have an impact on a range of polymers and rubbers used in the sector, according to BMI's latest Indonesia Petrochemicals report.
The automotive industry is set to shrink by 5% in 2015 as the domestic vehicle market, which accounts for 90% of volume sold, shrinks by a forecast 6.6%. However, this will be offset by growth in construction. The petrochemicals industry will also be protected by a weak rupiah, while lower naphtha feedstock prices should support the local industry from external competition.
In the long term, the outlook is positive. A burgeoning local market is supporting investment growth. Chandra Asri Petrochemical plans to start constructing a 120,000 tonnes per annum (tpa) synthetic rubber plant worth IDR5.6trn (USD435mn) in early 2016. Meanwhile, the company will increase the facility's existing ethylene production capacity by 43% from 600,000tpa to 860,000tpa by January 2016. In the fertiliser sector, PT Pupuk Indonesia (PIHC) is expected to increase its total production capacity to 19mn tpa in 2019 from the current 12.9mn tpa according to reports in Q215.
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