Equity Analysis /

Thailand: Chemical - 2023 playbook: Oversupply looms, be selective

  • Subdued demand in near-term, recovery expected afterward

  • Substantial new supply additions to pressure 2023 olefins spreads

  • Hefty incremental capacity to squeeze 2023 aromatics margins

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
9 December 2022

The global economic slowdown, lockdowns in China, and new capacity additions will continue pressuring the chemical spreads in 2023. Nevertheless, the current valuations have already priced in those factors, we believe. IVL as our preferred pick.

Subdued demand in near-term, recovery expected afterward   

The global economic slowdown and ongoing lockdowns in China will tend to exacerbate downward pressure on the chemical demand in 2023. Moreover, the commercial launch of new capacity and sustained high feedstock costs comprise other factors pressuring chemical spreads next year. Given these trends, we expect most chemical margins to sustain relatively stable YoY at low levels (or soften) during the period.