Abstract
Market Overview
The Singaporean chemicals industry is one the largest
sectors in Singapore. The Singaporean government
has been promoting the
industry since the mid-1990s, with the aim of increasing the share of
chemicals
and petrochemicals of total manufacturing output to 30% by 2010.
The country has a chemical complex
on Jurong Island, Singapore, acting as
a base for more than 94 domestic and international companies. The
chemical
industry output accounted for about SGD98.1bn (US$65.05bn) in 2008,
contributing more than
one-third the country’s manufacturing
output.
Industry Performance
Manufacturing output shrank by 13.5%
year-on-year in December 2008. The growth of the sector was
affected
throughout the year by the fluctuation in biomedical manufacturing output. The
three-month
moving average index for December declined 10.5% and the
seasonally adjusted month-on-month index
for December was 11% below that
of the previous month. For the full year in 2008, total manufacturing
output dipped 4.1% compared with 2007. Fixed asset investment (FAI) in
Singapore’s chemical industry
was reported at SGD8.55bn (US$5.68bn)
for the January-December 2008 period.
Industry Developments
In January
2008 it was reported that Finnish refining and marketing company Neste Oil
will be investing
SGD1.2bn (US$800mn) to build an 800,000 tonne per year
plant to manufacture biofuel. The plant will
produce NExBTL, which is
thought to be the cleanest renewable diesel available. The plant will use
the
company’s proprietary technology and will use palm oil as the
main input material. Construction will
begin in 2008 in the Tuas
Industrial Zone with completion expected in 2010.
In February 2008 it was
reported that Nikko Chemicals had invested SGD38.4m (US$ 25.4) in a new
surfactant plant to make ethoxylated surfactants that would be used in the
cosmetic industry. The site is to
be built on Jurong Island over 1.2
hectares (ha) and is expected to be operating by 2009, producing 3,000
tonnes in its first two years. Later the month it was reported that the
Germany-based LANXESS will
invest SGD823mn (US$545) in building a
production plant on Jurong Island to manufacture 100,000
tonnes per year
of butyl rubber. Construction will begin in 2009 and by 2010 supply of the raw
material
required by the plant, Raffinate 1, will be delivered by Shell
Eastern Petroleum to the site. The plant is
expected to require more than
200 staff once fully operational.
Meanwhile, in June 2008 Samsung and
Sitronic opened a SGD1.36bn (US$0.9bn) 300mm silicon wafer
factory in
Singapore. The factory, which began production in June, should have the
capacity to produce
300,000 wafers each month by 2010, making it one of
the largest wafer factories in the world. In October
2008 it was reported
that Japanese firm Kanto Kagaku, which makes speciality chemicals, began
construction on a SGD30mn (US$19.9mn) manufacturing plant and laboratory based
in Tuas. Operations
are expected to begin in the last quarter of 2009,
when production of highly purified chemicals will begin.
SGD Future
Risks
The economic downturn and weak demand is expected to have a
significant effect on manufacturing
levels and immediate investment.
Singapore is also experiencing a threat from resource-rich countries such as
Indonesia and Malaysia
where there are indigenous hydrocarbon feedstock
resources and low production costs for petrochemicals.
If these countries
improve their support infrastructure and, in the case of Indonesia, address
political
stability concerns, they may attract business that might
otherwise go to Singapore. Similarly,
diversification from oil to
petrochemicals in Middle Eastern economies may provide new competition for
Singapore. China and India continue to increase their capabilities within this
sector and this may also
influence Singapore’s position in the
chemicals industry.
The introduction of the EU Registration, Evaluation,
Authorisation and Restriction of Chemicals
(REACH) legislation is expected
to be one of the biggest obstacles in the future of Singapore’s
chemical
industry, and failure to educate chemical companies on compliance
could result in a decrease of export
levels to the EU, which accounts for
a significant proportion of Singapore’s exports.
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