“Global economic uncertainty and ongoing trade tensions which began in 2018 carried through into the whole of 2019. The petrochemical business was beset with relatively high crude oil and raw material prices, whereas prices of petrochemical products fell sharply in 2019 as demand growth weakened and supply length increased, with the new start-ups in the Middle East and the US having started to flood the market. Petrochemical producers reached the year-end with product markets under pressure from slower demand and with a subdued outlook for 2020, which has just started to also be compounded by the worsening health situation in China. 2020 will prove to be a difficult year for the petrochemicals business but we will carry on and focus on the start-up before end-2020 of the new value-added businesses.”
JG Summit is a pioneer in the petrochemical industry in the Philippines, having two wholly-owned petrochemical investments operating its fully integrated world-class manufacturing complex in Batangas City, around 120 km south of Manila. These subsidiaries, JG Summit Petrochemical Corporation (JGSPC) and JG Summit Olefins Corporation (JGSOC), are collectively known as the JG Summit Petrochemicals Group (JGSPG).
We have also set key strategic areas on where we shall play in order to achieve our ambition. First is prioritizing our domestic markets where we will maximize sales to current and prospective local customers. The Philippines has a sizeable domestic polymers and chemicals market that is still very much reliant on imports and therefore can benefit greatly from having a reliable local supplier. We will also serve close-to-home markets where we can take advantage of the Philippines’ geographical location vis-à-vis the South East Asian (SEA) and North East Asian (NEA) logistics. We could also realize value from arbitrage plays as the facility has the capability for loading deep sea cargoes to serve destinations such as the US and Europe which can be tapped whenever the opportunity arises. In addition, we shall optimize existing assets and investments. The available facilities allow us for expanding the product portfolio to include high-demand, high-margin fuels such as LPG and jet fuel. Lastly, we will strengthen direct linkages, i.e., target direct buying and selling where able. We will optimize direct supply and distribution channels for maximum margins.