Singapore’s Aster Chemicals and Energy is betting on a strong medium-term turnaround for the petrochemicals market, with a senior executive on Wednesday forecasting demand recovery to be imminent around 2027-2028 despite the ongoing industry pressure from oversupply and eroding margins.
Doubling Aster Chemicals’ ethylene (C2) export capacity on Bukom Island and Jurong Island in Singapore is among the initiatives the company has implemented in anticipation of demand growing across Asia, said Deputy CEO of Aster Chemicals and Energy, Andre Khor, during a keynote speech at the Asian Downstream Summit (ADS) in Singapore.
The ADS on 29-30 October is being held during the Singapore International Energy Week (SIEW) conference, which ends on 31 October.
Aster, a joint venture between Indonesia’s Chandra Asri and global commodities trader Glencore, operates a 1.1 million tonne/year C2 cracker on Bukom Island, alongside a refinery with an annual processing capacity of around 237,000 barrels/day.
OVERSUPPLY, DEMAND RECOVERY
The petrochemical market is currently experiencing oversupply, which is compressing margins in polyethylene and aromatics chains. Nearly 35 million tonnes of new ethylene capacity has been added since 2020, primarily in China and the US, according to Khor.
Utilization rates across major products like polyethylene (PE), polypropylene (PP) and styrene monomer (SM) are hovering around 70% compared to historical norms of 85-90%, and this is expected to persist through 2026.
However, Khor believes the current downturn is not indicative of a structural decline, but a “cyclical adjustment”.
“By 2027 and 2028, demand growth is expected to outpace new supply additions, particularly as China’s self-sufficiency plateaus and southeast Asia’s consumption accelerates,” said Khor.
As capacity rationalization takes hold and inventories normalize, utilization rates are expected to recover, first in polyvinyl chloride (PVC), followed by PP and PE.
Across northeast Asia, capacity rationalization is taking place amid drives to consolidate cracking facilities in South Korea, China and Japan.
INVESTMENTS
With medium-term recovery in mind, Aster is investing over $1 billion in growth and decarbonization, focused across its assets in Bukom and Jurong, while also consolidating vertically across the value chain and strengthening collaboration across Aster in Singapore and Chandra Asri in Indonesia.
Aster in May this year also reached a sales and purchase agreement to acquire Chevron Phillips Singapore Chemicals (CPSC) through its affiliate, Chandra Asri Capital, at an undisclosed fee.
“Energy demand in Asia will continue to grow. Petrochemicals will evolve, it will not disappear. We will adapt to new applications and technologies,” added Khor.