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Talk on Future Trends and Development in the Chemical Industry in Singapore by Mr Chua Yong Hwee, Assistant Head (Chemical Cluster) of the Singapore Economic Development Board (EDB), 18 June 2004 at Civil Service College SUMMARY OF TALK Singapore's chemicals industry delivered an encouraging performance in 2003. Output in 2003 rose by 23 per cent to $39.1 billion and value-added (VA) grew 9 per cent to $5.2 billion. This increase was despite the challenges of rising raw material prices and high energy costs confronting the industry globally. The robust performance boosted the chemicals industry's share of manufacturing output to over 26 per cent, up from 22.6 per cent in 2002, strengthening its position as the second largest industry after electronics. Investor interests remained centered on the growth of the Asia Pacific markets. HIGHLIGHTS OF 2003 Petroleum Petroleum remained the anchor. Output climbed an impressive 20% to reach $21.3 billion while VA grew by 2 per cent to $1.5 billion. 2003 saw a year of higher throughput and substantially improved refining margins, particularly in the second half of the year. Crude prices remained high throughout the year despite a brief decline in the second quarter following the Iraq war. Despite the continued overhang of regional refining capacity, Petroleum benefited from a cold winter and strong demand growth in Asia, particularly China. EDB will continue to enhance Singapore's position as a regional oil hub to meet the needs of the rapidly expanding energy markets of Asia by supporting the industry's efforts to upgrade, integrate and grow. Petrochemicals Petrochemicals turned in a sterling performance in 2003. Output soared by 38 per cent to $12.1 billion, and VA surged by 29 per cent to $1.4 billion. Key factors were increased output and sustained, higher prices across the majority of product groups. Existing plants ran at close to full capacity all year and new plants ramped up production. These new plants were also primarily in the production of higher value products such as Mitsui Chemicals' elastomers and Asahi Kasei's and Mitsubishi Gas Chemical's polyphenylene ether (PPE). With the widely anticipated upturn in the chemicals industry, companies are expanding to position for growth. An example is Sumitomo Chemical's $180 million expansion of its methyl methacrylate (MMA) and polymethyl methacrylate (PMMA) capacity on Jurong Island. Singapore's status as a leading chemicals hub continues to grow as we attract more global players and increasingly, players from emerging markets as they compete for positions in Asia. Specialty
Chemicals Specialty Chemicals industry saw steady growth of 5 per cent in output and 3 per cent in VA to $5.7 billion and $2.3 billion respectively. Flavours and Fragrances kept up double digit growth as leading companies such as Firmenich expanded and further integrated R&D with manufacturing. Electronic chemicals, materials and gases had modest growth on the back of improving conditions in the global electronics industry. The size and potential of Singapore's electronics industry continued to attract companies such as Nagase Finechem and HP Inks who established new plants to serve this attractive market. Lubricant and fuel additives also registered credible growth in 2003. With diverse end markets, Specialty Chemicals remains a consistent contributor. New initiatives were put in place to respond to the changing competitive landscape: · The Chemical and Process Technology Centre (CPTC) started up successfully. Several batches of students are undergoing leading edge training which will equip them to be "technicians-of-the-future". The center was officially opened by Minister of State (Trade and Industry) Dr Vivian Balakrishnan on 28 June 2004. · A new checkpoint to Jurong Island employing state-of-the-art database management systems and advanced security technology was opened to provide greater security in an efficient manner. · The development of Banyan LogisPark, an 80 hectare, integrated chemical logistics park on Jurong Island, was launched with the official opening of the park's first tenant Katoen Natie SembCorp, a joint venture between Katoen Natie and SembCorp Logistics. Other chemical logistics companies such as Oiltanking Odjfell and Vopak also expanded their storage capacities. · A new Research and Development Building for the Institute of Chemical and Engineering Sciences is being constructed on Jurong Island, and is expected to be completed by mid-2004. When fully-ramped up, the Institute will employ close to 200 Research Scientists and Engineers and help to spearhead the R&D efforts in the Chemicals Industry.
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