Plastics in Vietnam Report

Transcription

1 Plastics in Vietnam Report 1. History of Plastics in Vietnam In Vietnam, plastics were still unfamiliar to the public until the 1960s. One of the first developments within the Vietnam plastic industry started in , when China helped Viet Tri Chemical Factory to build a PVC production line with the initial installed capacity of 350 tonnes per year, which was then increased to 500 tonnes per year in However, after 9 years of operations the factory was closed down due to low capacity, outdated technology, low machinery efficiency and higher price compared to imported products. The plastic industry in Vietnam at that time mainly encompassed plastic assembling processes since all of the plastics were imported. Plastic products during this period came in simple designs and low in variety as well as quantity. Therefore, during the early 80s, the Vietnam plastic market was still flooded with overseas products. With the beginning of the political and economical innovation reforms in Vietnam in 1990s, the industry started to make significant improvements, growing 20 25% each year while diversifying in variety and quantity, even with better quality. From then on, the Vietnamese plastics manufacturing industry was able to notably penetrate the local consumption market and slowly reached out to potential regional and international markets as well. 2. General overview of the plastic industry in Vietnam 2.1. Plastic Market The plastics manufacturing industry is one of the industries with the highest growth rate in Vietnam with an average constant growth rate of 15-20% per annum over the last ten years due to a strong surge in consumption both locally and internationally. It is among the top ten

2 industries prioritized by the government for development planning due to its stable growth and reasonably strong performance in exports activities. Plastic Production During the period of , the Vietnamese plastic industry grew at an average rate of 20% a year. Net production output in 1989 was only tonnes, by 2006 it was 1.6 million tonnes. The output continued to increase to 4.5 million tonnes by In recent years, plastic output has continued to grow, although at a slower pace. Plastic Consumption In 1975, the average consumption of plastics per capita in Vietnam was only 1kg/year and did not show any sign of increasing until However, from 2000 onwards, average consumption of plastics per capita has been growing steadily, from 21kg in 2005 to over 40kg in 2012 and it is predicted to reach 55kg in 2015.

3 Vietnamese plastic products have been exported to more than 150 countries, with the major export markets being the USA, Japan, Netherlands, Germany, France, Thailand, Italy, China, Malaysia, Indonesia and the UK. Plastic exports are growing rapidly. In 2010, plastics officially became one of the export sectors in Vietnam that exceeded USD 1 billion and this number has almost doubled to USD

4 1.995 billion in The government are hoping for an export turn-over growth rate of 13.5% to 16.5% in 2014 compared to Although the industry seems to have grown steadily over the years, it must still import over 80% of its raw materials. As a result, the prices of plastic products produced in Vietnam are deeply affected by global economic situations, putting the whole industry at high risk. According to the Vietnam Plastic Association, only 300,000 tonnes of plastic raw materials, mainly PVC (polyvinyl chloride) and PET (polyethylene telephthalete), are produced locally while the industry needs to import up to 2.1 million tonnes per year, not including hundreds of other types of additives to facilitate the manufacturing process. Therefore, the price of plastic productions in Vietnam fluctuates constantly due to the changes in price of the imported materials, especially the changes in the price of the two most-used materials namely PP and PE with an increase of 13% per year on average. The fluctuations in prices of imported materials are also significantly affected by the exchange rates. When exchange rates increase, cost of materials increases but the selling price cannot be adjusted accordingly. This goes against the plastic manufacturers. Aside from importing raw materials, Vietnam also imports almost all types of machineries and equipment necessary for plastic production. Most of the equipment is imported from Asian countries such as Taiwan, China, Korean and Japan. Besides, Vietnam also imports equipment and technology from Germany and Italy.

5 2.2. Vietnamese plastic enterprises Geographical Location The number of plastic firms in Vietnam decreased sharply from 2,700 in 2006 to only 1,400 in This is due to a combination of reasons including the rising cost of production, the recent economic crisis and the inability to compete with large enterprises. According to the VPA report 2012 and the Statistical Yearbook of Vietnam 2012, there are 1,400 firms operating in plastic industry. Most enterprises are located in the South of Vietnam. Ho Chi Min City and the southern provinces contribute 83% to the total plastics production. Hanoi and the Northern provinces account for 13% and the central region covers the remaining 4%. Among these plastic firms, packaging firms account for the largest proportion (39%) and they also represent the largest export ratio, accounting for 66%. Consumer group accounts for 22% and construction group accounts for 20%. Construction group had strong growth in the years due to huge demand for construction at that time; however, this segment is facing many difficulties due to the freezing of the real estate market in the past few years. Technical plastics group accounted for 19%.

6 3. Sources of Materials for Vietnam plastic industry 3.1. Crude Oil Extraction

7 According to PetroVietnam, up to 2010, over 300 million tonnes of oil was extracted and on average, the total amount of oil extracted per annum is around 20 million tonnes. The development of Vietnam oil and gas industry started in 1981 with the mining in Tien Hai district, Hoa Binh city together with the birth of Vietnam Soviet Petroleum Joint Venture. The main oilfields are situated in Red River in the North, Phu Khanh basin in the middle and Nam Con Son, Cuu Long basin and Malay-Tho Chu basin in the South offshore Vietnam. In 2004, Vietnam produced a total of 130 million barrels of which 80% were from White Tiger oilfield under Vietsovpetro. This is a joint-venture of PetroVietnam and Russian Zarubezhneft. As of 2013, there are a total of 29 oilfields in Vietnam. Name of Oilfields Operating Block Contractor Starting Year White Tiger 09-1 Vietsovpetro 1986 Southern White Tiger 09-1 Vietsovpetro 2011 Dragon 09-1 Vietsovpetro 1994 Southern Dragon Doi Moi 09-3 Vietsovpetro 2009 Dai Hung 05-1b Dai Hung Company 1994 Bunga Cai Nuoc PM3-CAA&46-Cai TML&TVL 1997

8 Nuoc Rang Dong 15-2 JVPC 1998 Hong Ngoc (Ruby) 01&02 PCVL 1998 Topaz 01&02 PCVL 2010 Diamond 01&02 PCVL 2011 Pearl 01&02 PCVL 2009 Black Lion 15-1 CLJOC 2003 Gold Lion 15-1 CLJOC 2008 White Lion 15-1 CLJOC 2011 Brown Lion 15-1 CLJOC 2013 Bunga Raya PM3-CAA TML 2003 Bunga Tulip PM3-CAA TML 2006 Golden Tuna 09-2 HVJOC 2008 White Rhino 16-1 HLJOC 2011 White Sea Lion TLJOC 2012 Black Sea Lion TLJOC 2011 Red Dragon Fish Premier Oil -- Starling Premier Oil 2010 Coconut Premier Oil 2011 Phuong Dong 15-2 JVPC 2008 Thanh Long LSJOC 2012 Dong Do LSJOC 2013 Song Doc TSJOC 2008 Cendor PM304 Petrofac 2006 TML&TVL: Talisman Malaysia Limited & Talisman Vietnam Limited JVPC: Japan Vietnam Petroleum Co., Ltd PCVL: PetronasCarigali Vietnam Ltd CLJOC: Cuu Long Joint Operating Company TML: Talisman Malaysia Limited

9 TVL: Talisman Vietnam Limited HVJOC: Hoan Vu Joint Operating Company HLJOC: Hoang Long Joint Operating Company TLJOC: Thang Long Joint Operating Company LSJOC: Lam Son Joint Operating Company TSJOC: Truong Son Joint Operating Company Out of these 29 oilfields, the 3 major fields are White Tiger, Black Lion and Gold Lion. White Tiger Oilfield (Bach Ho) White Tiger Oilfield is the largest oilfield within the boundary of Vietnam and is the major source of oil for the country. It is located offshore south-east of Vietnam, 145km from Vung Tau beach. The estimated reserves are about 300 million tonnes and were extracted beginning Mobil struck oil in White Tiger field in February 1975, shortly before the Fall of Saigon and it was later developed by the joint Vietnamese-Russian entity Vietsovpetro in the 1980s and 1990s. On average, Vietsovpetro extracted tonnes of crude oil from this field, accounting for 80% of the whole crude oil production output of Vietnam. Crude oil from White Tiger field is of good quality and easy to filter. It is classified as sweet crude oil as it contains a minimal amount of sulphur and has high prices in the international market. However, according to statistics, after over 20 years of operation, oil production output of White Tiger field is significantly decreasing. In 2009, the crude oil production output was 5.4 million tonnes and this number dropped sharply in 2012 to 3.81 million tonnes. Experts predict this number will continue to fall in 2014 to around 3.40 million tonnes. Black Lion Oilfield (Su Tu Den) Black Lion oil field is located in the waters off southern Ba Ria Vung Tau Province, with a depth of 52m from the sea level. It was discovered in August 2000 and was put into operation from October 2003 by Cuu Long Joint Operating Company. The estimated initial crude oil production output is around 60,000 barrels per day. After a year of operation, Cuu Long JOC has extracted over 27 million barrels of crude oil (equivalent to 3.6 million tonnes) and earned a record of USD 1 billion in terms of their export revenue. However, according to Cuu Long JOC (Cuu Long Joint Operating Company), the current production output of this field has decreased to 50,000 barrels a day and this level of production can probably only be maintained for the next 10 years. Gold Lion Oilfield (Su Tu Vang)

10 Gold Lion is an offshore oil field located in Block 15-1 of the Cuu Long Basin. The basin is located southeast of Ba Ria-Vung Tau province of Vietnam and 6km away from the existing Su Tu Den field (Black Lion). It was discovered in October 2001 and operated by Cuu Long JOC. Production commenced in October The predicted output production is 65,000 barrels a day. This is the second largest oilfield operated by Cuu Long JOC and the fourth largest in Vietnam. The Government has also given permission to construct 2 helipads near the field to facilitate the process of exploring and extracting oil Refineries Although Vietnam is Southeast Asia's fourth-largest producer of crude oil, its limited number of refineries has led to an almost total reliance on imported oil products. Currently Dung Quat refinery is the first and only oil refinery operating in Vietnam. It has a designed capacity of 6.5 million tonnes of crude oil annually, which is equivalent to 140 thousand barrels per day and is under an expansion project to reach 10 million tonnes of output per annum in Operation commenced on February 25 th 2009 and reached full 100% capacity by August During the first phase, the plant processed crude oil from White Tiger fields and in the second phase, it will process both crude oil from White Tiger field and sour oil from Dubai. During the construction period, Dung Quat refinery has suffered international criticism regarding its location and economic value. The refinery, which took 15 years to build, was shunned by overseas investors as economically unviable due to its location in an isolated area, far from oil reserves. In the end, state oil monopoly Petrovietnam was forced to go it alone. In 1995, France's Total SA withdrew from a planned joint venture to build the refinery with Petrovietnam over the location. Then, in 2002, Russian state oil Zarubezhneft backed out due to disagreements over the plant's distant location and technical issues. A total of 7,000 households will have been moved by 2015 to make way for the economic zone and new industrial investment. While Dung Quat is currently Vietnam s sole oil refinery, six more proposed projects for refineries are being developed, with the construction of Nghi Son refinery plant having begun in October Nghi Son is the second planned oil refinery in Vietnam which is

11 scheduled to commence productions in It is located about 120 miles south of Hanoi in the Nghi Son Economic Zone, Thanh Hoa province. It would have a designed capacity of 10 million tonnes of crude oil per year, the equivalent to 200 thousand barrels per day, with the potential to increase the capacity to 20 million tonnes. The refinery will be supplied with crude oil imports from Kuwait. Vung Ro refinery project will kick off its construction in late 2014 and the facilities are planned to be commissioned in The plant will have a capacity of 8 million tonnes per year. It will be built in Dong Hoa, Phu Yen Province, with a total investment of around USD 4 billion. This project will be followed by the Nhon Hoi petrochemical complex project, as well as the Quang Ha, Binh Dinh and Van Phong refinery projects.

12 With more refineries set to be built, experts are concerned over the supply hang, environmental troubles and financial problems. Economic effectiveness of these projects are being questioned. Although they are heavily incentivised by the government, most of the input materials will be likely to be imported since the local oil production output is constantly decreasing over the year. Not including the proposed refinery in Ha Tinh, the Ministry of Industry and Trade estimated that the infusion of new plants would make local supply exceed demand by 7 million tonnes by 2020, and the figure would rise to 11 million tonnes by Gas There is around 680 billion cubic meters of natural gas in Vietnam gas reserves. Up to 2005, there were a total of 27 gas fields discovered in Vietnam, of which only 5 fields had proven reserves of more than 30 billion cubic meters, accounting for around 40% of the total reserves. Name of gas fields Block Contractors Year Note Tien Hai C DBSH PVEP Song Hong 1981 Natural Gas D14&Song Tra Ly DBSH PVEP Song Hong 2004 Natural Gas Lan Tay 06-1 BP 2002 Natural Gas Rong Doi, Rong Doi Tay 11-2 KNOC 2006 Natural Gas White Tiger 09-1 Vietsovpetro 1995 Associated Gas Rang Dong 15-2 JVPC 2001 Associated Gas Phuong Dong 15-2 JVPC 2008 Associated Gas Golden Tuna 09-2 HVJOC 2008 Associated Gas Bunga Kekwa Cai Nuoc PM3- CAA&46- Cai Nuoc TML&TVL 2003 Natural Gas & Associated Gas

13 Bunga Raya PM3-CAA TML 2003 Natural Gas & Associated Gas Bunga Seroja PM3-CAA TML 2003 Natural Gas Bunga Tulip PM3-CAA TML 2006 Associated Gas Bunga Orkid PM3-CAA TML 2008 Natural Gas Moc Tinh 05-3 BP 2013 Natural Gas Hai Thach 05-2 BP 2013 Natural Gas PVEP: PetroVietnam Exploration Production Corporation BP: British Petroleum KNOC: Korean National Oil Corporation JVPC: Japan Vietnam Petroleum Co., Ltd HVJOC: Hoan Vu Joint Operating Company TML&TVL: Talisman Malaysia Limited & Talisman Vietnam Limited TML: Talisman Malaysia Limited In the Nam Con Son basin, non-associated gas was found in 9 fields with billion cubic meters of gas, accounting for 40% of the reserves. Malay Tho Chu basin has 13 gas fields, 2 oil and gas fields with billion cubic meters of gas, accounting for 35% of the total reserves. The other fields were discovered in Red River basin and Cuu Long basin with 7.5 billion and 19.6 billion cubic meters of gas respectively. According to the statistics shown, Nam Con Son basin has the largest amount of gas reserves while Malay Tho Chu basin has the highest number of gas fields. Associated gas is mainly found in Cuu Long basin with the reserves of 58.4 cubic meters from the large oil fields such as White Tiger, Rang Dong, Hong Ngoc (Ruby), White Lion, Emerald and so on. Aside from that a small amount of associated gas can be found in oil and gas fields such as Bunga Kekwa Cai Nuoc and Bunga Raya from Malay Tho Chu basin. Crude oil in Vietnam is generally light, clean and contains minimal toxins, sulphur, heavy metals and nitrogen compounds. Therefore, the process of cracking and refining it takes less time and effort to remove impurities. Output Ratio from Cracking Crude Oil (%) Fractions White Tiger Dai Hung Naphtha Kerosene Diesel Oil

14 Fuel Oil Residue Plastic Production Plants in Vietnam The plastic industry relies heavily on petrochemical products. Currently, the petrochemical industry in Vietnam is still relatively new and in its prime stage, therefore almost all of the raw materials for plastic productions have to be imported. This leads to over-dependence of the industry on changes in the international market. Vietnam Petrochemicals Market 2009 As of 2013, only local productions of PVC and PET can meet the local demand. Currently, there are two PVC resin manufacturing plants which are TPC Vina Plastic & Chemical Corp., Ltd and Phu My Plastics & Chemicals Co., Ltd. with combined production output of over 300,000 tonnes per year. Besides that, there is another plastic resin manufacturer which is Formosa Plastics (100% capital of Taiwan). Formosa produces 145,000 tonnes of PET per year. However, in May 2014, Formosa Plastics suspended operations in Vietnam following the widespread anti- Chinese rioting that included mob assaults on Formosa factories. The riot involved thousands of people, causing 2 deaths and more than 100 injuries.

15 Vietnam Polystyrene is the one and only PS and EPS (expandable polystyrene) manufacturing plant in Vietnam. Located in Vung Tau, South of Vietnam, the plant was established in 2006 to meet demands of expandable polystyrene and is rapidly developing. The production output of Vietnam polystyrene is 30,000 tonnes per year. In August 2010, Binh Son Petrochemical Company officially starts operating the first PP factory of Vietnam which is part of Dung Quat refinery plant. The factory has a capacity of 150,000 tons per year and can produce 30 kinds of plastic resins from Homopolymer PP, meeting part of the domestic demand for PP resins. In 2010, the plant was expected to produce about 40,000 tons of resins (less than 2% of total imports). The plant can only achieve maximum capacity after With the Nghi Son refinery plant being put into operation in 2018, the total PP production output is expected to increase to 400,000 tonnes per year. Raw Material Producer Capacity Remarks PVC TPC Vina Plastic & Chemical Corp., Ltd Combined: 20% for export Phu My Plastics & Chemicals Co., Ltd 300,000 tpy 80% for local supply PP Binh Son Petrochemical 150,000 tpy Company PET Formosa Plastics Taiwan - Hung 145,000 tpy 30% for export Nghiep Co., Ltd PS/EPS/GPPS Vietnam Polystyrene Co., Ltd 90,000 tpy Production capacities of major domestic manufacturing plants As you can see, domestic supply currently provides about 700,000 tonnes of resins, meeting 20-25% of domestic demand. 5. Additives:

16 Together with raw materials for plastics manufacturing, Vietnam has to import hundreds of types of additives every year and this amount can reach up to a million tonnes per year. Currently there are a few plastic companies producing additives locally for use within the plastic industry, mainly in the Southern part of Vietnam such as: A Dong Company Co. Ltd, Dai A JSC, Latca JSC, Saigon Plastic Colour Co. Ltd amongst others. The largest firm which produces additives for the Vietnamese plastic industry is LG Vina Chemicals JV Co. which has the capacity of 30,000 tonnes of DOP plasticizers per year. The general additives produced domestically include reinforcement glass fibres, colour pigments, plasticizers and fillers. Since almost all of these companies are small and medium enterprises with low capacity, they can meet only a small part of the domestic demand for plastic additives. Most of the additives are thus imported from other countries. 6. Technology and Machinery: Vietnam is currently importing around 90% of the total machinery and equipment used for domestic production of plastics. In 2012, import turnover of machinery for plastics production reached USD 450 million. The majority of imported machinery is from the USA, Asian countries (including China, Japan, and Taiwan) and European countries (Germany, Italy and Austria) % of them are new machines imported from Asia. However, despite being less expensive, machines imported from Asian markets, especially China, are more out-dated than those from Germany, Italy, and Japan.

17 In the period , along with the fast growth of the plastic industry, plastic firms have invested extensively in upgrading technology and machinery to be able to compete effectively in both domestic and international markets. Currently, there are over 10,000 machines in the plastic industry including approximately 6,000 injection moulding machines, 3,000 blow moulding machines and 1,000 extrusion machines. Most of the hi-tech machines are concentrated in large enterprises Injection Moulding technology Out of 6,000 injection moulding machines used to make plastic components and parts for electronic devices, electrical suppliers, motorbikes and automobile industries in Vietnam, 75% of them are second-hand, outdated technology. Only around 1,000 among them are of new generation. The total imported value of injection moulding machines of Vietnam increased from 50 million USD in 2007 to 76 million USD in Some main brands currently present in Vietnam market include: Europe: Engel (Austria); Demag, Battenfeld, Krauss maffei, Arburg (Germany) America: Husky (Canada) Asia: Mitsubishi, Nigata, Toshiba, Kawaguchi, Sumitomo, Nissei, Kurabe (Japan); Chen De, Chuan Tian, Hai Tian, Yue Hong, Jwell, Keewa, Dakelianshun (China); LG, Dongshin, Woo Jin, Jinhwa (Korea); Chuan Lihfa, Fu chu sin, Lien yu, Yanghing, Jonwai, Han Chang (Taiwan)

18 6.2. Injection blow moulding technology A large number of plastic product manufacturers in Vietnam are using injection blow moulding machines to produce plastic packaging products, including PET bottles and kegs. The total imported value of blowing machines decreased from 26 million USD in 2007 to 14 million USD in The main brands present in Vietnam market include: Europe: Sipa (Italy); Sidel (France) America: Husky (Canada) Asia: Nissei, Placo (Japan); Kaimei, Parker (Taiwan); Sinco (Thailand); Hongzhen (China) 6.3. Extrusion Technology Extrusion technology is commonly used for making water drainage PVC pipes, water supply PE pipes, aluminium-plastic pipes, optic cables, PVC doors, frames, roofing, and wall coverings. This is a pellicle-blowing technology to make plastic packaging materials from pellicles. This technology is used for blowing polyethylene (PE), polypropylene (PP) bags and PVC pellicles. The total imported value of extruders increased slightly from 40 million USD in 2007 to 46 million USD in The main brands include: Europe: Amut SP (Italy); Battenfelf Kraussmaffei (Germany); Cincinati (Austria) America: PTI Plastic technical International GmbH, SMS Plastic Technology, Tecnomatic (US) Asia: Shin Kwang Engineering Co., (SK), Yarn Bang Electrical Machinery Co., ltd., SM Platek (Korea); Ka lien, Wuhan, Sen fa Machine Co., ltd (Taiwan); Koei Industrial Co., Ltd, Nissei, Sumittomo, Mitsubishi (Japan), Zhangjiagang (China). Currently, UK companies are among suppliers of machinery, apparatus, and parts for Vietnamese plastic industry.

19 Source: Ministry of Industry and Trade statistics Application of Plastics in Vietnam The industry is divided into many small segments based on end-products categories such as packaging, building, contractions, automotive, E&E, etc. The development of these segments is closely linked to the demand for plastic products and growth in these markets. Year Types of products Volume (tonnes) Rate (%) Volume (tonnes) Rate (%) Volume (tonnes) Rate (%) Volume (tonnes) Rate (%) Volume (tonnes) Rate (%) Volume (tonnes) Rate (%) Packaging 714,400 38% 917,600 40% 1,328, % 1,482,000 39% 1,627, % 1,8,000,000 40% Consumer 488,800 26% 619,380 27% 896,000 28% 1,140,000 30% 1,277,200 31% 1,440,000 32% Construction 413,600 22% 481,740 21% 576,000 18% 646,000 17% 618,000 15% 652, % Technical 150,400 8% 160,580 7% 272,000 8% 342,000 9% 370,800 9% 382, % Others 112,800 6% 114,700 5% 128,000 4% 190,000 5% 226, % 225,000 5% Total 1,880, % 2,2294, % 3,200, % 3,800, % 4,120, % 4,500, % Source: Ministry of Industry and Trade and GSO Of the total plastic output in 2012, plastic packaging accounts for 40% while plastic consumer, construction materials, and technical account for 32%, 15% and 9% respectively.

20 Packaging segment (40%): Packaging segment is the largest segment in the industry with more than 40% of total produced products. The value of this segment is said to have reached 180 billion USD in The stable growth of 4% per year is thanks to the nature of the end-products market such as food, beverage, and pharmaceutical, etc which was less affected by the fluctuations in the economic environment. The main products in this category include plastic bottles, food packaging, baskets and bins and so on. Consumer segment (32%): Vietnamese products contribute up to 90% of the market for consumer plastics. The main products include furniture such as tables, chairs, shelves, crockery, toys, shoes and so on. Building and Construction (14.5%): During , this segment was strongly impacted by the US and European reduction in public spending on building and construction industry. These regions are unfortunately the largest markets for this segment s products. However, the plastic building and construction segment was able to rebound in as global demand for plastic pipes goes up to 4.5%/year reaching 8.2 billion meters. The highest growth is from developing countries like China (30% of global demand), and Japan to rebuild the country after the earthquake. The products in this segment include pipes and pipe parts, floorings, ceiling panels, plastic door and so on. Technical (8.5%): With rising demand for electrical and automotive equipments like PC, TV, printers or car production parts, motorbikes, etc in India, South East Asia, and China, this segment has the potential to go up 5%/year averagely. Below is the list of major plastic companies in each segment in Vietnam:

21 8. Plastic Recycling in Vietnam: In recent years, recycled plastics products have finally been recognised; the recycled plastics segment is becoming more popular within Vietnam as firms are utilising the latest technology available. Global supply can still not meet demand for this line of products (especially PET Products). Therefore, there is is growing opportunities for Vietnamese firms that can produce these products.