Asia Pacific Chemical Industry Report

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Industry Report - Chemicals - May 2015
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Asia-Pacific
Chemicals Sectors
A Company and Industry Analysis
CONTENTS
May 2015
Current Environment Key Points
Current Environment
Sector Overview
Sector Performance
Leading Companies
Mergers, Acquisitions and Joint
Ventures
Industry Profile
Industry Size and Value
Production Levels
Sector Investment
Market Trends and Outlook
Polyethylene Glycol Presents
Opportunities in Asia
Rising Demand for Automobile
Adhesives
The Asia-Pacific is the Fastest
Growing Region for Aerosol
Propellants
Market Outlook
Country Profiles
China
India
Japan
Malaysia
South Korea
Taiwan
The chemical sector in the Asia-Pacific region grew in the six months under review, due to a jump
in M&A deals, demand for chemical and chemical products and investment activity in the region.
Despite the slow recovery of the global economy, the Asia-Pacific continued to dominate the global
specialty chemicals market, closely followed by North America and Europe.
The share prices of selected companies assessed by Mergent from November 7, 2014, to April 7,
2015, grew by an average of 9.57%.
A challenging and slowly recovering global economy led to increased Asia-Pacific joint venture
and acquisition activity, as companies sought to optimize their business portfolios by developing a
strategic alliance to boost profits and their market share values.
Industry Profile Key Points
The Asia-Pacific chemical industry is among the most diversified of global industries and produces
more than 70,000 products ranging from toiletries and plastics, to cosmetics, petrochemicals,
pharmaceuticals and fertilizers.
Chinas chemical companies continue to dominate the Asia-Pacific chemical market, replacing
Germany as the worlds second largest chemical producer, after US.
Changing market dynamics have spread global chemical production throughout Asia, mostly to
China and India, making China the worlds second largest chemical producer after the US, and
contributing to Asias production levels and overtaking those in Europe.
The Indian chemical industry is the countrys second largest industrial sector, after IT, with nine
broad segments: basic chemicals, petrochemicals, fertilizers, paints, varnishes, glass, perfumes,
toiletries and pharmaceuticals.
Market Trends and Outlook Key Points
Currency Conversion Table

The Scope of this Report
Key References
Comparative Data
Reports Coverage
Polyethylene glycol (PEG) has recently begun to experience growth in the global market as one
of the top lubricating agents. With the progressive development of the pharmaceutical industry in
countries such as China, Brazil and India, the market demand for PEG is expected to rise.
Asia-Pacific countries, particularly China and India that are spearheading the commercial vehicle
production industry, are the largest consumers of adhesives in the global market.
Aerosol propellants, widely used in products such as spray paints, air fresheners, and deodorants,
have experienced significant growth in the global market over the past six years.
The outlook for the Asia-Pacific chemical industry is expected to remain stable over the next six
months, with China poised to lead growth due to a steady economy, abundant supply of feedstock
and a favorable labor market.
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Asia-Pacific
Publisher
Jonathan Worrall
Director
John Pedernales
Managing Editor
Peter OShea
Research Analyst
Ani Paschal Chukwuemeka
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Current Environment
Sector Overview
Major Asia-Pacific chemical sectors grew in the six months
under review, due to an increase in M&A deals, demand
for chemical and chemical products and further investment
activity within the region. The strong rebound in fastemerging industries such as automotive, construction
and agricultural sectors boosted chemical demand in the
region, which continued to attract investment as global
chemical players saw it as an expansion platform for their
petrochemical and chemical business due to the local
availability of cheap feedstock.
Despite the slow recovery of the global economy, the
Asia-Pacific continued to dominate the global specialty
chemicals market, closely followed by North America and
Europe in the six-month period. Countries such as China
and India underpinned the demand for the specialty market
due to strong industrial activity. Japan and China are
expected to lead the Asia-Pacific market in the near future.
Japans economy and its chemical industry performed
better than expected in the six-month period, mainly due
to monetary policies to enhance global competitiveness
that promoted the depreciation of the yen. In June 2014,
Japans Prime Minister Abe announced a broad package
that comprised the third arrow of the plans, including
liberalization of the agriculture and healthcare sector, and
also reducing the corporate tax from 35% to below 30%,
which began in January 2015.
China enjoyed continuous encouraging domestic demand,
strong agricultural markets and rapid development of
industrialization and infrastructure. However, its chemical
industry faced growing external competition in feedstock
supplies, a petrochemical surplus and safety issues,
causing chemical players to expand their efforts to become
more competitive globally. In India, persistent inflation and
a weak investment climate curbed chemical sector growth.
Nevertheless, rising disposable incomes and higher
standards of living led to higher consumption of chemicals
in the country.
In Malaysia, a sustained revenue expansion, a stronger
economy, more effective spending and the implementation
of expenditure reforms boosted growth. Gebeng Industrial
Park, located in Kuantan, continued to grow as a major
center for high-grade petrochemical production, with BASF

Petronas Chemicals spending RM1.5 billion (US$0.42
billion) on an integrated aroma ingredients complex to be
built within its existing site. Due to be fully operational
in 2016, the complex will employ 120 technically skilled
locals. Moreover, the demand for rare earth elements
continued to pick up due to the Malaysian Governments
plans to implement a cost-efficient system for car vehicles.
Rising domestic chemical demand in Taiwan drove growth
over the six-month period, thanks largely to the booming
private consumption and significant acceleration in public
and private investment, while increased production and
global demand boosted employment. However, due to lack
of natural resources, Taiwans chemical industry faced
higher energy costs as it depends heavily on fuel imports.
A lack of attractive R&D incentives and booming US shale
gas discoveries continued to be major threats to Taiwans
chemical sector, causing a shift in focus to more original
products, advances in technology and strategic innovation
plans to gain competitive advantage.
Sector Performance
In the six-month period, major Asia-Pacific economies
performed moderately. The share prices of selected
companies assessed by Mergent from November 7, 2014,
to April 7, 2015, grew by an average of 9.57%, with LG
Chem Ltd and Sinopec Corp seeing double digit increases.
The share price of the regions largest oil refiner Sinopec
Corp (HKSE: 00338) closed at HK$3.18 (US$0.51) on
April 7, 2015, compared with HK$2.43 (US$0.39) on
November 7, 2014, reflecting a 30.86% increase on the
Hong Kong Stock Exchange, while worlds largest lithiumion maker LG Chem Ltds (KSE: 051910) share price rose
by 21.48% on the Korea Stock Exchange, from KRW188,
500 (US$169.65) to KRW229, 000 (US$206.1) on April
7, 2014.
Formosa Petrochemical Corp (TWN: 6505) saw its
share price increase by 3.22% in the six-month period
to NT$70.50 (US$2.21) on the Taiwan Stock Exchange
(TWN), compared with NT$68.30 (US$2.13) six months
earlier. Japans third largest chemical company Sumitomo
3
Current Environment
Table 1: Selected Companies Share Price Movements in the Three Months from November 7, 2014 to April 7, 2015
Company
Formosa Petrochemical Corp
Share Price on
November 7, 2014
April 7, 2015
Rise/Fall
(%)
TWN: 6505
NT$68.30
NT$70.50
3.22
Country
Ticker
Taiwan
LG Chem Ltd
South Korea
KSE: 051910
KRW188,500
KRW229,000
21.48
Sinopec Corp
China
HKSE: 00338
HK$2.43
HK$3.18
30.86
Sumitomo Corp
Japan
TSE: 8053
JPY1220.00
JPY 1317.50
7.99
Tata Chemical Ltd
India
BSE: 500770
Rs418.55
Rs456.00
8.94
Reliance Industries
India
BSE: 500325
Rs980.90
Rs833.20
-15.05
Average Rise/Fall
9.57%
Source: Mergent analysis, 2014
Chemical Corps (TSE: 8053) share price rose 7.99% to

JPY 1317.50 (US$11.06) from JPY1220.00 (US$10.24).
Tata Chemicals Ltd (BSE: 500770) share price increased
on the Bombay Stock Exchange, by 8.94% from Rs418.55
(US$0.29) to Rs456.00 (US$7.34), due largely to the
fast growing demand form agriculture and for consumer
staples such as salt and pulses. The only company that
underperformed was giant oil refiner Reliance Industries
(BSE: 500325), whose share price dropped 15.05% from
Rs980.90 (US$15.79) to Rs833.20 (US$13.41) on the
Bombay Stock Exchange. The drop was due to lower crude
oil prices and volumes mainly in the refining and its oil and
gas business.
Leading Companies
Taiwans second largest oil refiner Formosa Petrochemical
Corps revenues for the year ended December 31, 2014
dropped 1.95% to NT$913.08 billion (US$28.57 billion),
from NT$931.33 billion (US$29.15 billion) a year earlier. Its
operating profit dropped 99% to NT$227 million (US$7.10
million) from NT$23.41 billion (US$0.73 billion), while
its net income dropped to NT$9.06 billion (US$0.28
billion) from NT$26.85 billion (US$0.84 billion), mainly
due to increased cost of revenue and selling, general and
administrative costs. The poor financial result was largely
due to the global decrease in oil prices.
The worlds largest lithium-ion battery maker, South
Korean-based LG Chem Ltds (KSE: 051910) saw its
fourth quarter 2014 revenue total KRW22.57 trillion
(US$0.02 trillion), down by 2.4% from KRW23.14 trillion
(US$0.02 trillion) a year earlier. Net income declined
by 31.4% to KRW867.9 billion (US$0.78 billion) from
KRW1.26 trillion (US$0.001 trillion) a year earlier,

mainly due to poor demand from its major petrochemicals
markets, especially China, and slower growth in its
liquid crystal display sales. However, sales by its energy
solutions division outperformed those of other divisions,
due to increased polymer battery production and a wider
range of battery use. Operating income fell by 26.3%
from KRW1.66 trillion (US$0.0014 trillion) a year earlier
to KRW1.23 trillion (US$0.0011 trillion), due largely to
increased selling, general and admin expenses.
Japans third largest chemical company Sumitomo
Chemical Corps (TSE: 8053), in the nine months to
December 31, 2014, saw its gross profit declined 23.40%
to 685.1 billion (US$5.75 billion), from 894.4 billion
(US$7.51 billion) a year earlier, while profit for the year
declined massively by 97.94% to 4.8 billion (US$0.04
billion) from 233.9 billion (US$1.96 billion) a year
earlier. The poor financial result was mainly due to high
investment and operating activities within the financial
period.
One of Asias largest refiner, China Petroleum and Chemical
Corporation or also known as Sinopec Corp engaging in
segments such as chemical, petrochemical, petroleum,
natural gas, fertilizer and synthetic fiber. In 2014, Sinopec
Corps chemical posted turnover, other operating revenue
and other income of RMB2.83 trillion (US$0.46 trillion),
a 1.9% decrease year-on-year, primarily due to the
price decline of crude oil and petrochemical products.
Confronted by severe market conditions with low chemical
products prices, the company reduced its feedstock costs by
increasing the light feedstock ratio, strengthening efforts in
R&D, production, and sales of new products, and adjusted
its product mix. The company reported operating revenue
4
Current Environment
of RMB427.5 billion (US$68.91 billion) for its chemical
segment, down by 2.3% from the same period a year ago,
due mainly to a drop in chemical product prices.
Tata Chemicals is a global India-based company that
involve in production and manufacturing of chemicals,
fertilizers and food additives. For the third quarter ended
December 2014, the companys consolidated net sales
grew 5% from Rs4, 580.46 billion (US$73.7 billion)
in the previous corresponding period of 2013 to Rs4,
820.46 billion (US$77.6 billion). This is primarily due to
an improved business environment in India and oversea,
in particular the US. Despite the persistent inflation and
weak investment climate, the company saw an impressive
growth in its net profit of Rs205 billion (US$3.3 billion) in
the third quarter 2014, 39% higher than the corresponding
period a year ago. This was mainly due to the robust
demand for soda ash in India.
The worlds largest producer of polyester fiber and yarn,
and Indias largest petrochemical company, Reliance
Industries (NYSE: RELIANCE) saw its net revenues
decrease by 20.4% to US$15.3 billion in third quarter 2014,
compared with the corresponding period of 2013, due
mainly to a decline in the sales of petrochemicals, refining
and oil and gas businesses. Its third quarter net profit totaled
US$822 million, down by 7.7% from the same period a
year ago. The company, which operates the worlds largest
refinery complex in Gujarat, has been investing heavily
in consumer-facing areas such as telecoms and retail to
expand beyond refining and petrochemicals.
Mergers, Acquisitions and Joint Ventures
A challenging and slowly recovering global economy led
to increased Asia-Pacific joint venture and acquisition
activity, as companies sought to optimize their business
portfolios by developing a strategic alliance to increase
profits and boost their market share values. In addition, due
to the steady regional trade and rebound in the fast-emerging
markets, the investors confidence level has restored in
order to further expand their business relationship.
On April 1, 2015, leading Chinese oil refining, petrochemical
and new coal chemical engineering company, Sinopec
Engineering Group Co Ltd (HKG: 2386), and Exxon Mobil
Research and Engineering Company (EMRE) participated
in a cooperative development agreement (CDA) for
advancement of fluid bed methanol to gasoline technology,
widely recognized as methanol gas (MTG) technology.
The CDA was to leverage the two companies expertise and

experience in methanol conversion to gasoline and fluid
bed technology development to refine and commercialize
a fluid bed version of the technology. Both companies
are developing the technology under the cooperative
development agreement with the intent to globally license
the technology. With more than forty years of R&D
experience in MTG technology, Exxon Mobil is looking
forward to continuing these efforts through its cooperative
agreement with Sinopec.
Exxon Mobils manager of technology sales and licensing,
Vince Alberico believes that once the technology is
successfully developed they anticipate it to have a strong
market competitiveness and broad marketability.
On February 3, 2015, Sumitomo Chemical Corp (TSE:
8053) agreed to acquire compound semiconductor
materials business of Hitachi Metals Ltd (TYO: 5486). The
acquisition was finalized on April 1, 2015 and the business
Sumitomo Chemical acquired from Hitachi Metals
included those of compound semiconductor materials,
such as gallium nitride (GaN) substrates, gan epiwafers,
and gallium arsenide (GaAs) epiwafers. The acquisition
allowed Sumitomo Chemical to expand its business of
GaN substrates and epiwafers for use in electronic and
optical components, for which the market has kicked off
on a full scale, while at the same time devoting its efforts
to early commercialization of the products for use in power
devices.
In addition, the fusion of Hitachi Metals ample resources
and superior mass-production technology and Sumitomo
Chemicals technological and other expertise will
accelerate the Companys work for commercialization of
its next-generation GaN epiwafers that are currently under
development. As for GaAs epiwafers, which Sumitomo
Chemical has already commercialized, the company looks
to further strengthen its business foundation by making the
best use of a reservoir of each others resources. Sumitomo
Chemical positions the compound semiconductor
materials business for next-generation power devices as a
potential area in its long-term business portfolio for the ITrelated chemicals sector. The business acquisition further
reinforced the companys relevant operations, and paved
way for it to become a leading company in the field.
5
Industry Profile
Industry Size and Value
The Asia-Pacific chemical sector is the regions largest
industry and among the most diversified worldwide, with
more than 70,000 products ranging from toiletries to
plastics, cosmetics, petrochemicals, pharmaceuticals and
fertilizer. For a decade, changing market dynamics have
spread global chemical production throughout Asia, mostly
to China and India, making China the worlds second
largest chemical producer after the US, and contributing to
Asias production levels overtaking those in Europe.
gases, agricultural chemicals and fertilizers, inorganic

chemicals, soaps and detergents and cosmetics and paints.
Its oleo chemical segment is one of the worlds largest,
accounting for 20% of global production. Malaysia
has the worlds 15th largest natural gas reserves and 28th
largest crude oil reserves, which make its petrochemical
and polymer industry the most important segment, with
investment totaling RM112 billion (US$31.33 billion) in
2013.
Chinas chemical industry is the countrys third largest,

after textiles and machinery, and accounts for nearly 27%
of global chemical production, which generated revenues
of US$810 billion, excluding pharmaceuticals in 2013.
The National Development and Reform Commission
(NDRC) estimates there are 25,169 domestic chemical
companies that manufacture specialty chemicals, rubber
products, organic chemicals and synthetic materials and
that they enjoyed modest growth in 2013. Revenues totaled
RMB3.8 trillion (US$0.61 trillion), up by 13.2% compared
with RMB3.3 trillion (US$0.53 trillion) in 2012.
South Koreas chemical industry is the worlds sixth largest

in term of production after those of China, the US, Japan,
Germany and Brazil. The industry is the countrys second
largest manufacturing sector and has four broad segments:
petroleum products, plastic resins, synthetic fibers and
synthetic rubbers. The South Korean Governments plan
to develop 100 core technologies that focus on green
chemistry and clean energy has attracted more than 470
foreign chemical engineering companies, helping develop
South Korea as a chemical hub. It has boosted foreign
direct investment (FDI) by US$7.5 billion from 2003 to
2013, and made the country the second highest recipient
of FDI.
The Indian chemical industry is the countrys second largest

industrial sector, after IT, with nine broad segments: basic
chemicals, petrochemicals, fertilizers, paints, varnishes,
glass, perfumes, toiletries and pharmaceuticals. Indias
Department of Chemicals and Petrochemicals estimates the
industry, which accounts for more than 5% of the countrys
GDP, had an annual growth rate of 12.5% in 2013, and
generated net revenues of US$155 billion. Indias rising
standard of living and higher disposable income have
boosted growth in consumer spending, leading to higher
demand for chemical products.
Taiwans chemical industry remains vital to the countrys

economy, accounting for 29.5% of manufacturing GDP
in 2012, according to the American Institute of Chemical
Engineers (AIChE). It has 11 broad segments: base
chemicals, fertilizers, petroleum and kerosene products,
petrochemical intermediates, polymers, specialty
chemicals, pharmaceuticals, paper and printing inks,
synthetic fibers, rubber and plastics.
Production Levels
Japans chemical industry is the worlds third largest in

terms of shipment and production, with the Japan Chemicals
Industry Association (JCIA) reporting production was
worth US$338.2 billion in 2012, and the industry employed
about 880,000 people. However, the booming US shale gas
and oil industry has becoming a major feedstock threat to
Japan, so its chemical industry is intensifying its focus on
specialty chemicals and niche products.
Malaysias chemical industry is diversified, with seven
broad segments: oleo chemicals, petrochemicals, industrial
Production growth in the Asia-Pacific region was better

than that in Europe and the US, with China being the largest
chemical producer in 2013, and chemical production in
most Asian countries returning to pre-financial crisis level.
However, there was a slowdown in Chinas production,
growth due largely to surpluses after local and foreign
players massive investments in basic chemicals over the
previous five years. Slowdowns in major Chinese industries
such as automotive, and construction also curbed chemical
production growth in 2013.
6
Industry Profile
The American Chemical Council estimates Asia-Pacific
chemical production, excluding pharmaceuticals rose
by 19%, higher from that in 2012, thanks largely to easy
credit policies, positive agricultural performance and
higher demand for industrial chemicals for infrastructure
development. The improving global economy and an
emerging middle class led to higher demand for goods from
Asias electrical and electronics, agricultural, construction
and automotive sectors, bringing growth to the chemical
industry in 2013.
Table 2: Asian Chemical Production Growth
Country
Japan
China
India
South Korea
Singapore
Taiwan
% Change Year-over-Year
2012
2013
-3.2
0.8
9.3
8.5
1.4
5.8
3.7
4.4
-3.3
2.3
-3.1
2.0
increase the capacity from 7.5 million tonnes to 15 million

tonnes. The company is expanding its entire value chain
of polyester including purified terephthalic acid (PTA),
the preferred raw material for polyester. Polyester fiber
manufacturers in India have been importing large quantities
of PTA, as a gap exists between demand and supply.
Tata Chemicals Ltd announced in December 2014 that
it plans to invest Rs150 million (US$2.42 million)
into setting up a nutraceuticals manufacturing facility
in Sriperumbudur, Channai which is expected to be
completed in the next three years. The investment is in line
with the companys strategy to focus on the farm solutions
and food products business. Tata expects its branded and
non-commodity business, which is at 22% of turnover, to
increase to 50% in the next seven years.
Source: American Chemical Council
Sector Investment
Despite the sluggish economy, there were several major
investments in the Asia-Pacific chemicals sector in the
second half of 2014. In November 2014, Asias largest
chemical producer Formosa Plastic Group (TWN: 6505)
announced its decision to pour an addition US$2 billion
into its US investment projects. In a move motivated by the
cheaper supplies of natural gas, the companys expansion
in the US has led to the group constructing and purchasing
numerous PVC factories and chemical production facilities
in the country.
In December 2014, Leading South Korean chemical
company LG Chem Ltd reported it would invest KRW320
billion (US$304 million) to expand its crude acrylic acid
(CAA) and super absorbent polymers (SAP) plants by
September 2015. CAA is used as a raw material for diapers
and SAP is used in paints. The expansion is expected to
boost LG Chems annual production capacity of CAA by
160,000 tonnes to 510,000 tonnes, and of SAP by 80,000
tonnes to 360,000 tonnes.
Also in December 2014, major Indian oil refiner Reliance
Industries (NYSE: RELIANCE) announced plans to invest
Rs4 billion (US$644 million) in polyester value chain to
7
Market Trends & Outlook

Polyethylene Glycol Presents Opportunities in Asia
Polyethylene glycol (PEG) has recently begun to
experience growth in the global market as one of the top
lubricating agents. With the progressive development of
the pharmaceutical industry in countries such as China,
Brazil and India, the market demand for PEG is expected to
rise due to its non-toxic, resistant, and physical properties
such as its solubility in organic solvents. As a result, this
polyether compound has also become increasingly popular
in construction, automotive, and marine industries for use
in water-based coatings, paints, and inks.
For the last two years PEG has been increasingly used in
the medical industry as a dispensing agent, solvent, tablet,
and ointment, accounting for more than 40% of market
share, according to report by Grand View Research Inc.
Having also gained popularity in pharmaceutical and
biotechnological applications, these compounds are useful
as thickeners, moisturizers, and softeners in cosmetics.
However, the existing health and environmental concerns
that come with the addition of PEG into personal care
products are expected to abate market growth.
China and India are currently the fastest growing
pharmaceutical, automotive, and construction sectors
globally, making the Asia-Pacific one of the largest
markets for PEG. Throughout the rapid industrialization
in this region over the past ten years, there has been a
steady demand for PEG and these trends are anticipated
to continue over the long term period. The key players in
the global market consist of BASF SE, The Dow Chemical
Company, Ineos, Liaoning Oxiranchem, Jiangsu Haian
Petrochemical Plant, India Glycols, and Taijie Chemical.
Having just announced the Draft National Chemical Policy
in 2012, the Indian Government aims to improve domestic
chemical production output, and consequently raise the
countrys share in the global chemical industry by twofold, from 3% to 6% within 2013 and 2020. This is likely
to augment PEG market demand in the years to come.
Rising Demand for Automobile Adhesives
Adhesives, one of the most versatile binding agents
available on the market today, has a long-established usage
in industries involved with building and construction,

packaging, and transportation. Consequently, the
market for adhesives has thus become impervious to
the general slowdown in economic activity. Major AsiaPacific economies spearheading the commercial vehicle
production industry, particularly China and India, are
the largest consumers of adhesives in the global market.
With a predicted compound annual growth rate (CAGR)
of 3% between 2014 and 2019, the regional demand for
substances such as epoxy, polyurethane, and acrylics,
is thus expected to grow, according to figures by the
Chemicals and Petrochemicals Manufacturers Association
(CPMA).
Acrylic-based adhesives, which made up 35% of the total
volume in the region in 2013, is the leading product segment
in the regional market due to its quick-setting properties,
environmental resistance, and stronger adhesion to hardto-bond substances. Forecasts for 2014 to 2020 estimate
the CAGR to be approximately 3.5%, making acrylicbased adhesives the fastest growing product in the region,
according to RnRMarketResearch.
World leading automotive adhesive solutions supplier
Henkel (OTCMKTS: HENKY) claims ownership to the
largest adhesives factory in the world located in Shanghai,
China. In July 2014, Henkel Asia-Pacific released Loctite
4090, its first hybrid adhesive designed with strong and
rapid bonding properties. About a month later, Henkel
collaborated with the organizers of the Federation
Internationale de lAutomobile (FIA) Formula E Team
China Racing to feature exclusive electric-powered
Formula cars designed to promote sustainable technology.
China continues to play a leading role as the worlds
largest automotive market in terms of production and
population. As part of their development plan for fuelefficient and new energy cars, the Chinese government
aims to hit a total market volume of five million cars by the
year 2020, according to the National Bureau of Statistics.
Manufacturers are thus promoting hybrid body structures
composed of plastic and composite materials combined
with traditional steel and light alloy components. Due to
their ability to secure hard-to-bond substrates, the demand
8

for adhesives is expected to increase along with the
countrys growing New Energy Vehicle industry.
The Asia-Pacific is the Fastest Growing Region for
Aerosol Propellants
Aerosol propellants, which are widely used in products
such as spray paints, air fresheners, and deodorants, have
experienced a significant growth in the global market. As
these propellants are increasingly used in personal care
products, such as personal hygienic items and cosmetics,
consumer demands are expected to drive market growth
throughout the years to come.
The aerosol propellants industry consists of different
segments, such as CFC, dimethyl ether (DME) and
methyl ethyl ether, nitrous oxide and carbon dioxide, and
hydrocarbons. Hydrocarbon propellants, which are highly
stable and less toxic compared to other propellants, account
for the majority of market volume and are supported based
on the guidelines of the US Environmental Protection
Agency (EPA). These organic propellants are said to have
zero ozone depletion potential, and due to their short
atmospheric residence times are expected not to have any
significant impact on global warming.
As a result, there has been a growing demand for
hydrocarbons to be used in products such as hairsprays,
antiperspirants, styling mousses, and shaving creams,
which is expected to play a major role in driving market
growth.
In the next six years, the Asia-Pacific will be the
fastest growing region in the global market for aerosol
propellants due to increasing awareness, consumer
income, and product demand, according to Chemical
Market Associates Inc (CMAI). A change in lifestyle of
the general population has also resulted in an increase in
personal care product use among the younger generations,
primarily from countries such as China and India, which
is expected to have a positive impact on overall market
growth. Older generations have also contributed to
the increasing demand for propellants due to the use of
aerosols in anti-ageing cosmetics.
Several large corporations that play key roles in the global
market, such as Lindal, Aeropress, Honeywell, and Bayer
Material Science AG, have begun to introduce more
environmentally-friendly propellants that offer lower
volatile organic compound (VOC) formations at lower

costs which are expected to broaden opportunities for the
market in the years to come.
Market Outlook
The outlook for the Asia-Pacific chemical industry is
expected to remain stable over the next six months, with
China poised to lead growth due to a steady economy,
abundant supply of feedstock and a favorable labor
market. Mergent believes that Chinas chemical industry is
maturing and entering a phase of slower but solid growth,
supported by its petrochemical industry, which is one of
the largest consumers and importers over the past decade,
and is expected to maintain its growth momentum, driven
by key products such as polyethylene and polypropylene.
Chemical production in China is forecast to rise by 8.5%
in 2015, compared with 8.8% in 2014, according to data
by the China Petroleum and Chemical Industry Association
(CPCIA)
Indias chemical industry is expected to see double-digit
growth in 2015 with sales is estimated to reach US$150
billion 2015, according to figures by the Indian Chemical
Council. Many of the fundamentals that support chemical
industry in the country, such as urbanization, higher GDP
growth, and a growing middle class, is expected to increase
demand. Furthermore, the Indian government is expected
to introduce and implement several policies and special
economic zones centered on the petrochemical sector
to attract foreign and private investment and make the
industry more progressive.
Chemical growth in Japan also has a promising outlook,
with chemical production expected to grow by 1.5% in
2015 and 2.2% in 2016, compared with 1.4% in 2014.
A strong rebound in the industrial and construction
sectors continued to contribute to the growing demand
for Japanese chemicals such as adhesives, paints and
coatings, while a weakening yen is expected to promote
export growth.
Taiwan and South Koreas chemical industries are likely to
expand over the next six months as continuous R&D efforts
should boost trading activities and market share, despite
challenges linked to structural issues in their economies.
Some of the more emerging chemical industries in the
region such as Vietnam and Indonesia are expected to
record strong growth.
9

Thailand, Singapore and Malaysia are expected to attract
multinational corporations to establish their operation
in their countries due to its experienced workforce and
plentiful feedstock. Relatively easy financing options
and improving business climate will foster growth of
the manufacturing, automotive, construction and home
appliances industries, boosting demand for chemicals,
particularly plastic manufacturers.
10
Country Profile
China
Sector Overview
Leading Companies
Chinas chemical industry maintained solid growth over

the six months under review, due to high domestic demand
for basic chemicals, paints and other products used by
end market sectors such as automotive and construction.
Increased consumer spending and a booming automotive
market have led to stronger earnings in segments such
as fine and specialty chemicals, fertilizers, lubricants,
synthetic rubber, engineering plastics and polymers.
Sinopec Corp (SSE: 60028)
Chinas chemical market continued to grow at double-digit

rates and remains the worlds largest, rising faster than
the countrys GDP. Chinas chemical industry was valued
at US$1.31 trillion in 2013. China imported 5.52 million
tones of polyethylene resin (PE) in the fist seven months
of 2014, up 14.6% from the same period a year ago. Its
polypropylene resins (PP) imports also rose during the
period, up by 7.68% to 2.98 million tones.
In the first quarter of 2015, figures released by Chinas
National Development and Reform Commission show
China produced a total of 4.94 million tones of caustic
soda, a year on year decrease of 0.4%, while the output of
soda ash and calcium carbide reached 4.37 million tones
and 3.96 million tones, up 2.1% and 6.7% from a year
earlier, respectively. The output of ethylene grew 5.7%
year on year to 2.95 million tones, and those of plastics in
primary form rose 12.9% to 11.55 million tones. Synthetic
rubber output increased 6% to 899,000 tones and synthetic
fiber output increased 15.4% to 6.29 million tones. Overall
growth rate for the period was 3.3% lower than that of the
same period in 2014.
The countrys abundant natural resources and cheap
feedstock attracted steady investment and lead to a
marginal improvement in external demand. With an
estimated 25,000 active companies, reforms by the
Chinese Government continued to encourage enterprises
to enhance their value chains, choosing new paths of
industrialization and compete internationally in order to
improve self-sufficiency in chemicals and establish an
environment that promotes sustainability. These measures
also aim at benefiting the global chemical industry with
their investments in China by providing enhanced market
access.
One of Asias largest refiner, China Petroleum and Chemical

Corporation or also known as Sinopec Corp engaging in
segments such as chemical, petrochemical, petroleum,
natural gas, fertilizer and synthetic fiber. In 2014, Sinopec
Corps chemical posted turnover, other operating revenue
and other income of RMB2.83 trillion (US$456.2 billion),
a 1.9% decrease year-on-year, primarily due to the price
decline of crude oil and petrochemical products.
Confronted by severe market conditions with low
chemical products prices, the company reduced its
feedstock costs by increasing the light feedstock ratio,
strengthening efforts in R&D, production, and sales of
new products, and adjusted its product mix. The company
reported operating revenue of RMB427.5 billion (US$68.9
billion) for its chemical segment, down by 2.3% from the
same period a year ago, due mainly to a drop in chemical
product prices.
PetroChina Co Ltd (SSE: 601857)
Chinas oil and gas giant PetroChina Company Ltd, a
subsidiary of China National Petroleum Corp, produces
oil and natural gas, petroleum products such as gasoline,
diesel and kerosene, and petrochemical products such as
synthetic resins, synthetic fiber raw materials and polymers,
synthetic rubbers and urea. For the year ended December
31, 2014, its consolidated revenue rose 1.1% from the
year-earlier to RMB2.28 trillion (US$367.5 billion), due to
the adoption of continuous chemical and biotechnological
innovations.
However, a drop in crude oil prices and consecutive
reduction of the domestic refined oil price, as well as
weaker demand for petrochemical and refined products
both domestically and internationally ate away at profit
margins. The companys refining and chemicals segment
dropped by 3% to RMB869 billion (US$140 billion),
compared with RMB896 billion (US$144 billion) a year
ago. This was primarily attributed to a drop in the expenses
associated with the purchase of crude oil and feedstock oil
from external suppliers.
11
Country Profile - China

Market Outlook
The outlook for certain sectors of Chinas chemical industry
is expected to grow stronger than others, with sectors
such as specialty chemicals and fine chemicals having
ample opportunity for growth in 2015. Agrochemicals
are expected to perform well following a slump in 2012,
supported by higher consumption of chemical fertilizers.
China is expected to face a severe oversupply of Group
II base oils in 2015 due to heavy domestic and overseas
capacity expansions. Its bitumen market is expected to
remain in oversupply in the first quarter of 2015, as demand
is estimated to be weak while production may stay high.
Production capacity of methyl tertiary butyl ether (MTBE)
is expected to expand at a slower rate after nearly five years
of strong growth due to a glut in supply.
As Chinas automotive industry is poised to continue at
a growth rate of 5% until 2020, chemical sectors such
synthetic rubber, lubricants and engineering plastics will
benefit from the growth. Newly established structural
reforms, which focus on quality, profitability and
sustainability, are expected to present chemical firms an
opportunity to add to their value chains by expanding their
business competing internationally.
12
Country Profile
India
Sector Overview
The Indian chemical industry remained a significant
contributor to the countrys economic and industrial growth
over the last six months. The domestic market size of the
industry totaled US$118 billion in 2014 and accounted for
5.6% of the countrys GDP in the year ending March 31,
2015. It also comprised approximated 3% of the global
chemical market, according to a report by Tata Strategic
Management Group.
The countrys rising standard of living and rising
disposable surplus income helped to drive growth in
consumption of consumer goods. This in turn resulted in
greater demand for chemical products. Stable growth in
the automotive, construction and agriculture sectors also
boosted demand for chemical products. The industrys
main products included basic chemicals, petrochemicals,
fertilizers, paints, varnishes, glass, perfumes, toiletries and
pharmaceuticals.
The governments measures to improve competition in
the chemical sector included the abolition of industrial
licensing for most segments and granting 100% approval
for foreign direct investment. Chemical companies in
India will have to align their strategies and consolidating
themselves to face stiff competition from global companies.
Nevertheless, the sale of chemical products remained
strong due to rising demand from China as its main trading
partner and the booming US shale gas production.
Tata Strategic Management Group estimates Indias
chemical industry is likely to be worth US$190 billion by
the financial year of 2017 and 2018 due to a forecast rise in
demand for chemicals from various sectors. One of the key
factors that influenced Indias chemical industry growth
was the new Government administration headed by Prime
Minister Narendra Modi, who was elected in May 2014.
The new Government offered new hope for the Indian
chemical industry, with signs looking positive.
The Government followed through on its commitments
to foster a more business-friendly environment for the
chemical industry and helped to serve as the foundation
for further development of the countrys industrial
manufacturing value chain. Local and international
Investors started to witness growth, as the Indian chemical

industry re-established its position as an engine of growth
for the global chemical industry.
Leading Companies
Tata Chemicals (BSE: 500770)
Tata Chemicals is a global India-based company involved
in the production and manufacturing of chemicals,
fertilizers and food additives. The company ranks as the
worlds second largest soda ash maker with manufacturing
facilities across most continents including Asia, Europe,
Africa and North America. For the third quarter ended
December 2014, the companys consolidated net sales
grew 5% from Rs4, 580.46 billion (US$73.7 billion) in
the previous corresponding period of 2013 to Rs4, 820.46
billion (US$77.6 billion). This was primarily due to an
improved business environment in India and overseas, in
particular the US.
Despite persistent inflation and a weak investment climate,
the company saw an impressive growth in its net profit of
Rs205 billion (US$3.3 billion) for the third quarter 2014
39% higher than the corresponding period the previous year.
This was mainly due to the robust demand for soda ash in
India. The company is one of few companies worldwide to
have guarded its secret to soda ash production technology.
Reliance Industries Ltd
Indian conglomerate Reliance Industries Ltd (RIL) is

one of the worlds largest private energy businesses. It
comprises three segments; petrochemicals, refining and,
oil and gas. For third quarter 2014, the company saw its
net revenues fall by 20.4% to US$15.3 billion, compared
with the corresponding period of 2013, due mainly to a
decline in the sales of petrochemicals, refining and oil and
gas businesses.
In the same period, net profit amounted to US$822
million, down by 7.7% from the same period a year
ago. The company, which operates the worlds largest
13
Country Profile - India

refinery complex in Gujarat, continued to invest heavily
in consumer-facing areas such as telecoms and retail to
expand beyond refining and petrochemicals.
Market Outlook
The outlook for the Indian chemical industry in 2015 is
positive, with improving standards of living and rising
disposable incomes continuing to boost the industry, as
most end markets are highly dependent on chemicals in
their production processes. This should lead to several
manufacturing companies focusing intensely on expansion
plans.
Furthermore, the countrys cheap labor costs, vast pool
of scientists, plentiful bio-based feedstock, and new
government policy for setting up National Manufacturing
Investment Zones is expected to attract foreign investors.
However, to remain competitive, Indian chemical
companies must focus on adopting and developing
advanced technology to face future challenges as it
increases its role in the global chemical sector.
14
Country Profile
Japan
Sector Overview
Over the last six months the chemical industry in Japan
bounced back following a slight decline in the first quarter
of 2014. Falling automotive production and weaker growth
in the construction sector hinged industry growth, making
Japan turn its attention towards new chemical segments as
the global demand for chemicals and chemical products
increased.
Rapid growth in global new energy vehicle markets
and the accelerated application of lithium battery in
communications and energy storage fields in the wake of
the advent of 4G era continued to drive global demand for
anode materials. A report by RnRMarketResearch shows
that in 2014 global lithium battery anode materials output
totaled around 70,000 tons, mainly in Japan and China,
which together made up more than 95% of global anode
materials sales volume.
The industry showed improvements over the last six
months, due largely to an impressive government stimulus
and fiscal policy. A strong rebound occurred in the
industrial and construction sectors, contributing to growing
demand for Japanese chemicals such as adhesives, paints
and coatings, while a weakening yen continued to promote
export growth in the country.
Japan maintained its position as the EUs second biggest
trading partner after China, with imports from Japan to
the EU dominated by machinery and transport equipment
and chemical products. Although the trade relationships
between the EU and Japan have been characterized by
big trade surpluses in favor of Japan, trade figures have
become much more balanced in recent times. However
Japan continues to be a country where, due to the specific
features of the Japanese society and economy, doing
business or investing is often challenging.
Moving forward, continuous growth is expected in
the industry, with IHS Chemical Week forecasting
chemical production in Japan could grow 1.5% in 2015
and 2.2% in 2016, compared with 1.4% in 2014. Chemical
companies in Japan have put more efforts in restructuring
and consolidating their domestic petrochemical operations
due to falling demand and excess capacity. It is also
important that chemical companies continue to invest
overseas, so as to access the growth that they dont have

at home.
Leading Companies
Asahi Kase Corp (TSE: 3407)
Asahi Kasei is one of Japans top three chemical producers
in diversified segments such as basic chemicals, plastics,
fertilizers, construction materials, fibers, electronic
materials and medical products. The company continues to
enjoy huge growth in net sales, thanks largely to favorable
performances in its homes segments and higher chemicals
and pharmaceuticals sales volumes, while the weaker yen
helped boost exports.
For the fiscal first nine months ended December 31, 2014,
Asahi Kaseis net sales rose 5.83% to 1.47 billion (US$
billion) from 1.39 billion (US$0.38 billion) in the same
period of 2013, while operating income rose by 148%
to 118.7 million (US$0.99 million) from 47.8 million
(US$0.40 million). Its ordinary income grew to 127.3
million (US$1.06 million) from 53.1 million (US$0.44
million) and net income grew by 127% to 88.4 million
(US$0.74 million), compared with 38.9 million (US$0.32
million) a year earlier.
Asahi Kasei plans to invest billions of yen to its subsidiary
Fuji Branch for production equipment and aims to
generate revenues of about 30 billion (US$0.25 billion)
by 2020. Its production materials will be purchased from
US Crystal IS (a private company), which it acquired in
2011.
Shin-Etsu Chemical Co Ltd (TSE: 4063)
Tokyo-based Shin-Etsu Chemical is one of the worlds
largest suppliers of semiconductor materials, semiconductor
silicon, polyvinyl chloride (PVC) resins, synthetic quartz
glass, methyl cellulose and electronic materials. It operates
in three segments: organic and inorganic chemicals,
electronic and functional materials, and others.
Its fourth quarter 2014 revenue was 1.16 billion (US$
billion), compared with 1.02 billion (US$0.0085 billion)
15
Country Profile - Japan

in fourth quarter 2013. Its operating income rose to 172.42
million (US$1.44 million) from 156.35 million (US$1.31
million), while net income rose 7.47% to 113.62 million
(US$0.95 million), compared with 105.72 million
(US$0.88 million). Amid an uncertain global economy,
the company aggressively strengthened its production
capacity and expanded the number of manufacturing bases
to achieve better results in 2014.
Sumitomo Chemical Corp (TSE: 8053)
Sumitomo is one of Japans largest chemical companies,
producing basic chemicals, petrochemicals, plastics,
IT-related chemicals, fertilizers and pharmaceuticals.
In addition, the company has produced over 4,000
different types of silicone in its 60 years engagement in
manufacturing silicone products. In the nine months to
December 31, 2014, its gross profit declined 23.40% to
685.1 billion (US$ billion), from 894.4 billion (US$7.51
billion) a year earlier, while profit for the year declined
massively by 97.94% to 4.8 billion (US$0.04 billion)
from 233.9 billion (US$1.96 billion) a year earlier. The
poor financial result was mainly due to high investment
and operating activities within the financial period.
Market Outlook
As a result of the Governments expansionist fiscal policy
and aggressive stimulus programs, together with increased
global demand for industrial chemicals and petrochemical
products, the Japanese chemical industry is set to grow
throughout 2015. Companies that produce materials for the
electronics industry, for instance, should enjoy a relatively
good year. However, they might still be affected heavily
by the rise in consumption tax that was implemented in the
spring of 2014 by Government.
Also, some companies have made strategic plans to upgrade
their value-added products to maintain competitiveness
and investor confidence. The weaker Japanese currency
is expected to boost exports, but lead to a rise in the cost
of imported raw materials, while domestic consumer
spending may be restrained due to higher sales tax.
16
Country Profile
Malaysia
Sector Overview
The Malaysian chemical industry showed signs of growth
in the six months under review, with the industry and it
products staying as one of the leading industries in the
country, and maintaining its second position as the largest
contributor to Malaysias total exports of manufactured
goods. The industry has a maintained a very strong linkage
to almost every other sector of the economy, as It provides
vital support to other industries including automotive,
electrical and electronics, pharmaceutical and construction.
However, the industry is a high-tech and capital intensive
industry, which requires highly trained and skillful human
resources for its research and development, operating
activities and continuous development programmes.
Despite this, it has evolved to produce new technologies
and new products, and the big players in this industry
are mostly dominated by the Multinational Companies
(MNCs).
According to the Central Bank of Malaysia (Bank Negara
Malaysia), Malaysias gross exports grew by 7.3% in
2014, compared with 5.7% in 2013, boosted by higher
manufacturing activities and consumption. Chemicals and
chemical products export statistics improved, with exports
totaling RM56.82 billion (US$15.89 billion) in 2014,
compared with RM51.90 billion (US$14.52 billion) in
2013, while petroleum products exports totaled RM68.97
billion (US$19.29 billion), compared with RM66.86 billion
(US$18.70 billion) year earlier. Thanks to the improved
performance of the Malaysian economy and increased
global demand for its chemical products.
The National Trade Promotion Agency of Malaysia

forecast that the global demand for polyethylene resins,
HDPE, LLDPE, and LDPE, is expected to rise 4% per
year to 99.6 million metric tones (MMT) in 2018, valued
at US$164 billion from 81.78 MMT in 2013. Its report
also shows that exports of polyethylene to China in 2014
was valued at RM574.0 million (US$160.60 million), an
increase of 1,600.3% or RM540.3 million (US$151.17
million), compared with a year earlier.
Exports to Indonesia were up 3,468.2% from RM9.7 million
(US$2.71 million) to RM345.5 million (US$96.67 million)
due to increased demand for petrochemicals in Indonesia.

Indonesias industry currently sources almost 40% of the
petrochemicals it utilized in the production of plastics from
overseas and neighboring countries including Malaysia,
according to the National Trade Promotion Agency of
Malaysia. India also grew by 115% from RM13.6 million
(US$3.80 million) to RM136.2 million (US$38.1 million).
The industry continued to be a striving sector as it
continued to be one of the most recognized and developed
chemical industries in the world. It is not only capable of
fulfilling the nations requirement of chemical products
but also exports its chemical products to other countries
including Japan, Hong Kong, China, Singapore, Thailand
and even US. The key areas in which the chemical industry
in Malaysia is specially advanced are the petrochemicals
and oleo chemicals. This is as a result of its endowments
with huge amount of petroleum resources and palm Oil
resources.
Leading Companies
Texchem Resources (KUL: TEXCHEM)
Malaysian trading and manufacturing conglomerate
Texchem Resources produces specialty chemicals,
consumer products, industrial packaging and processed
food. In fourth quarter 2014, its revenues totaled RM1,
022.93 million (US$286.2 million), up by 7.26% from
RM953.62 million (US$64.07 million) in fourth quarter
2013. Gross profit rose 10.37% to RM229.02 million
(US$64.07 million) from RM207.50 million (US$58.05
million), while operating income rose 59.97% to RM13.23
million (US$3.70 million) from RM8.27 million (US$2.31
million) a year earlier.
Chemical Company of Malaysia (KUL: CCM)
Chemical, fertilizer and healthcare giant Chemical
Company of Malaysia (CCM) reported a 11.6% revenue
increase to RM51.02 million (US$14.27 million) in fourth
quarter 2014, while profit before tax (PBT) surged 52%
to RM13.92 million (US$3.89 million), compared with
RM9.16 million (US$2.56 million) in the corresponding
financial quarter in 2013. The improved earnings were due
17
Country Profile - Malaysia

to increased demand from all sectors including government
hospitals and export markets.
CCM is now focusing on improving its advanced
technology, niche and therapeutic products for its regional
pharmaceutical business. It also aims to expand its regional
presence and its sales team has penetrated the Philippines
and Singapore.
Market Outlook
Continuous efforts to promote exports and attract global
investment have resulted in a positive outlook for
Malaysias chemical industry over the next six months,
with the Government planning to attract manufacturing
projects with multiple levels of investment. Malaysian
chemical exports are expected to grow continuously,
supported by the fast emerging industries, including
automotive, infrastructure, construction, electrical and
electronic, and personal care.
The Malaysian Government expects the inflation rate
to remain manageable in 2015, supported by subsidy
rationalization, stable prices of goods, adequate domestic
demand and improved productivity quality that should lead
to chemical industry capacity expansion over the next four
years.
Mergent believes the outlook for polyethylene resins,
HDPE, LLDPE, and LDPE will remain positive in
Malaysia, as demand from neighboring and overseas
countries increases, and as export figures hits high
percentages.
18
Country Profile
South Korea
Sector Overview
Over the past six months, South Koreas chemical industry
performed well amid solid economic growth and an
increase in exports of chemical products. It also remained
the second largest manufacturing sector, after coal and
petroleum products.
Koreas Customs Service estimates the value of chemical
imports in South Korea fell to US$1133 million in February
2015, from US$1209 million in January 2015. Chemical
imports averaged US$81.23 million from the year 2000
until 2015, reaching an all time high of US$1625 million
in July 2014 and a record low of US$0 Million in March
of 2000.
South Koreas benzene exports rose 35% in 2014 against
2013 as new aromatics plants started operations. An
estimate by Koreas Customs Service shows about 1.88
million metric tons was exported in 2014, compared
with 1.39 million metric tons in 2013. Of the 2014 tally,
908,365 metric tons was transported to the US, about 48%
of the total and more than double the 336,959 metric tons
was sent to the US market in 2013. But South Koreas
benzene exports to China declined to 257,534 metric tons
in 2014, down 39% from 424,456 metric tons the year
before.
South Korea currently has 25 chemical companies
with manufacturing facilities, operating in four broad
segments: petrochemicals, plastic resins, synthetic fibers
and synthetic rubbers. Data from the Korea Petrochemical
Industry Association (KPIA) shows national ethylene
production capacity totaled 7.3 million tons in 2013, with
South Korea remaining a leading Asia-Pacific oil refiner,
with China, Singapore and Indonesia being its main oil
exports market.
South Korea is a massive consumer of petrochemical
products. It consumes more than 2.3 million barrels per day
(bbl/d) of petroleum and other liquids, making it the ninthlargest consumer in the world. According to the Korea
National Oil Company (KNOC), Korea has a small amount
of domestic oil reserves, but the country relies significantly
on crude oil imports to meet its demand. A majority of
South Koreas total oil production of 60,000 bbl/d is based
on refinery processing gains and a small portion of biofuels
production.
South Koreas chemical industry is facing global market

challenges in advanced technology and demand for
improved production quality. As a result, it is making
a major transformation from a large-scale commodity
industry to one with core environmentally friendly
technologies and improved R&D in high risk areas to
remain competitive globally.
Leading Companies
LG Chem Ltd (KSE: 051910)
Lucky Goldstar Chemical Ltd, or LG Chem Ltd, is the world
largest lithium-ion battery maker and makes diversified
products including cosmetics, personal care products,
petrochemicals, pharmaceuticals and specialty chemicals.
It has 21,966 workers in South Korea and operates in
Europe and the Americas. Although its business outlook has
been affected by slow global economic recovery affecting
demand for its petrochemicals, it remains a leading global
producer.
In fourth quarter 2014, its revenue totaled KRW22.57
trillion (US$0.02 trillion), down by 2.4% from KRW23.14
trillion (US$0.02 trillion) a year earlier. Net income
declined by 31.4% to KRW867.9 billion (US$0.78 billion)
from KRW1.26 trillion (US$0.001 trillion) a year earlier,
mainly due to poor demand from its major petrochemicals
markets, especially China, and slower growth in its liquid
crystal display sales.
However, sales by its energy solutions division
outperformed those of other divisions, due to increased
polymer battery production and a wider range of battery
use. Operating income fell by 26.3% from KRW1.66
trillion (US$0.0014 trillion) a year earlier to KRW1.23
trillion (US$0.0011 trillion), due largely to increased
selling, general and admin expenses. LG Chem is focused
on producing more high-profit petrochemical products and
diversifying its IT and electronics materials, producing
new OLED and touch materials.

SK Innovation
SK Innovation is a leading energy provider with
subsidiaries SK Energy Co, SK Global Chemical Co
19
Country Profile - South Korea

and SK Lubricants Co producing chemical lubricants,
petroleum and petrochemicals. The SK Group is the third
largest conglomerate in South Korea that owns 113 offices
with 70,000 employees worldwide.
strengthening of the chemical industry in the next six

months. Toward the end of 2015, South Korea will have
more ethylene plants in an annual production capacity of
more than 300,000 tons.
The prolonged volatility in oil prices has affected demand

for its oil products making its 2014 outlook less favorable.
In second half 2014, its operating income totaled KRW1.06
billion (US$0.00095 billion), compared with KRW733.20
million (US$0.65 million) a year earlier. Operating profit
rose 69.26% to KRW923.60 million (US$0.83 million)
from KRW550.98 million (US$0.49 million) a year earlier.
Net income declined to KRW111.25 million (US$0.10
million) from KRW376.30 million (US$0.33 million).
With an on-going but slow global economic recovery, the
company expects growth in its refining margins and a better
performance by its lubricants business. The establishment
of strategic business relationships and capacity expansions
should continue to build up SK Innovation values.
In January 2014, SK Innovation formed a joint venture,
Beijing BESK Technology, with Chinas state-run Beijing
Automotive Industries Holdings (private company) and
Beijing Electronics Holding (private company), the
worlds No.5 LCD manufacturer. The company stated that
the collaboration will be a catalyst to expand its market
share in the Chinas fast-emerging electric vehicle (EV)
market as China is expected to become the worlds single
largest EV market in 2020 with Beijing policy to increase
subsidies to EV buyers.
Market Outlook
South Koreas chemical industry is gradually evolving
to become leader in the world market. However, new
investments in energy resources, a shift to higher-valueadded products, and development of major environmental
friendly technologies are needed for South Korea to
improve with the most advanced chemical economies.
Despite the slowly improving global economic climate
and the booming US shale gas industry, the outlook for
South Koreas chemical industry looks fragile over the
next six months due to continuous volatility in crude oil
prices and a new wave of challenges in adapting advanced
technologies. The stronger Korean won, which has reduced
exporters dollar earnings, will also restrain profit growth.
However, with South Korea paying more attention to
its petrochemicals business, there is hope for further
20
Country Profile
Taiwan
Sector Overview
In the six months under review, the Taiwan chemical
sector showed significant improvements, with an
improved regulatory landscape and changes that impacted
compliance programs and initiatives. The beginning of
2015 gave rise to emerging regulations anticipated to
have the greatest impact over next couple of years. Under
Taiwans Ministry of Labor, the globally harmonized
system (GHS) labeling of chemicals became effective
on July 3, 2014, while the EPAs Management Measures
on toxic substances labeling and safety data sheets came
into force on December 11, 2014. All chemicals listed
in Taiwans phase III list currently comply with GHS
requirements.
Chemicals is Taiwans most important and the largest
industry, with more than 2,500 chemical products produced
by 2,300 companies manufacturing raw materials and
petrochemical intermediaries, plastics, synthetic rubbers,
fibers, petroleum and coal-based products. Despite the
uncertain global and domestic economic situation, the
industry continued to grow throughout 2014, thanks
largely to improved demands for fine chemicals, and
semiconductors.
However, higher crude oil prices are a problem as the
sector is highly dependent on oil imports. According to
the Department of Statistics, oil imports made up 23.9%
(US$65.3 billion) of total imports in Taiwan in 2014,
compared with 12% a year earlier. The industry also faced
strong competition from China, South East Asia and the
Middle East. Most domestic sectors such as chemicals,
electrical engineering, household products, metals and
textiles are under threat from China, with Taiwan losing
competitiveness because Beijing promotes production
chain localization and Chinese firms are now producing
their own intermediate raw materials, machinery and
equipment.
Among Taiwanese Government strategies to overcome
the problem is attracting R&D resources from countries
worldwide and, following the signing of the Economic
Cooperation Framework Agreement (ECFA) with China,
15 foreign companies have shown interest in establishing
R&D centers in Taiwan. The Government has invited
innovative companies worldwide to help in transforming
the technologically intense chemical industry into an

industry with a point of originality.
Leading Companies
Formosa Petrochemical Corp (TWN: 6505)
Formosa Petrochemical Corp (FPCC), Taiwans second
largest oil refiner, sells petrochemicals such as ethylene,
propylene, butadiene and benzene, and naphtha cracking
products such as toluene and xylene. In 2013, its refined
crude oil output surged as the companys three naphtha
cracking plants were operating at full capacity, producing
about 527,000 barrels per day.
Revenues for the year ended December 31, 2014 dropped
1.95% to NT$913.08 billion (US$28.57 billion), from
NT$931.33 billion (US$29.15 billion) a year earlier. Its
operating profit dropped 99% to NT$227 million (US$7.10
million) from NT$23.41 billion (US$0.73 billion), while
net income dropped to NT$9.06 billion (US$0.28 billion)
from NT$26.85 billion (US$0.84 billion), mainly due
to increased cost of revenue and selling, general and
administrative costs. The poor financial result was largely
due to the global decrease in oil prices.

Formosa Plastics Corp
Formosa Plastics Corp (FPC) is one of the worlds leading
petrochemical and polyvinyl chloride (PVC) resins
manufacturers. Its revenues for year ended December 31,
2014 totaled NT$216.58 billion (US$6.77 billion), up by
0.5% from NT$215.42 billion (US$6.74 billion) a year
earlier, thanks largely to increased demand for its PVC,
polyethylene (PE) and polypropylene (PP) after it restarted
its vinyl chloride monomer (VCM) plant in Kaohsiung
and its PE plant in New Taipei. Operating income rose to
NT$5.51 billion (US$0.17 billion) from NT$4.58 billion
(US$0.14 billion) a year earlier. Despite a good operational
and revenue results, net income fell by 13.41% to NT$17.99
billion (US$0.56 billion) from NT$20.72 billion (US$0.64
billion) due to high income taxes.

In August 2013, Formosa Plastics established a US$1.15
billion joint venture with Australias third largest iron
21
Country Profile - Taiwan

ore exporter Fortescue Metals Group Ltd (FMG: ASE)
following approval from the Australian Foreign Investment
Review Board and Taiwans Investment Commission.
The venture built an iron ore mine in Australia, which
commenced production of 1.5 million tons a year in 2015,
and will eventually expand production to 11 million tons
a year.
Market Outlook
The outlook for Taiwans chemical industry is for
improvement over the next six months, supported by a
global economic recovery that should increase demand
for products. To offset strong competition from China,
South East Asia and the Middle East, the Government
has formulated a strategic innovation plan to develop and
enhance new products. Some Taiwan chemical giants
are expanding their operations overseas, with Formosa
Plastics announcing last year that it will build an ethylene
plant in Louisiana, with others to follow in the US, China
and Vietnam in the near future. Taiwans expanding
production network will make its chemical industry more
international.
22
Currency Conversion Table

Currency exchange rates as of January 12, 2015
Currency Unit
Units per US$
US$ per unit
US Dollar (US$)
Chinese
6.2016
0.1612
Indian Rupee
62.0871
0.0161
Japanese Yen
118.2967
0.0084
3.5733
0.2798
1084.1558
0.0009
31.8824
0.0313
Malaysian Ringgit
Korean Won
Taiwanese Dollar
Source: Federal Reserve Bank of New York

Note: Base currency is US dollar (US$)
23
The Scope Of This Report

This report looks at the chemicals industries in the Asia-Pacific, with a focus on China, India, Japan, Malaysia, South
Korea and Taiwan. The report examines the current environment in the sector, profiles the industry and discusses market
trends and outlook. The key financial results for leading companies in each country sector, as reported by the company,
are represented in the comparative data tables on proceeding pages.
Research analysts draw on a range of credible industry and company data sources as well as news and information
services to research and analyze the current trading environment, industry landscape and market trends and outlook for a
particular sector. Primary sources are used, unless otherwise indicated, and include company data, e.g. annual reports and
company financial results: macroeconomic and trade data; data information from global and country regulatory, industry
and trade bodies; government data; and reports from industry organizations and private research organizations.
Industries covered by the industry reports are defined by standard industry classification systems and leading companies
are identified on this basis. The following SIC codes are relevant to the industry: 2812 (Alkalies and Chlorine); 2813
(Industrial Gases); 2816 (Inorganic Pigments); 2819 (Industrial Inorganic Chemicals); 2821 (Plastics Material and
Synthetic Resins, and Nonvulcanizable Elastomers); 2822 (Synthetic Rubber); 2823 (Cellulosic Man-Made Fibers); 2824
(Man-Made Organic Fibers, Except Cellulosic) 2841 (Soaps and Other Detergents, Except Specialty Cleaners); 2842
(Specialty Cleaning, Polishing and Sanitary Preparations); 2843 (Surface Active Agents, Finishing Agents, Sulfonated
Oils, and Assistants); 2844 (Perfumes, Cosmetics, and Other Toilet Preparations); 2851 (Paints, Varnishes, Lacquers,
Enamels, and Allied Products); 2861 (Gum And Wood Chemicals); 2865 (Pigments); 2869 (Industrial Organic Chemicals);
2891(Adhesive And Sealants); 2892 (Explosives); 2893 (Printing Ink); 2895 (Carbon Black); 2899 (Chemicals and
Chemical Preparations); 2873 (Nitrogenous Fertilizer); 2874 (Phosphatic Fertilizers); 2875 (Fertilizers, Mixing Only);
and 2879 (Pesticides and Agricultural Chemicals).
24
Key References
Global and Regional
American Chemical Society (ACS)
The primary US professional organization for chemists and related professionals.
http://www.acs.gov
American Chemistry Council (ACC)
The association represents the US chemical industry on public policy issues; it also conducts research and administers the
industrys environmental, health and safety program.
http://www.americanchemistry.com
Asian Development Bank
A membership development finance institution engaged in promoting the economic and social progress of its developing
member countries in the Asian and Pacific regions.
http://www.adb.org
Chemical Market Associates Inc (CMAI)
A research and consulting firm that offers services for petrochemical companies worldwide.
http://www.cmaiglobal.com
Organisation for Economic Cooperation Development (OECD)
The OECD groups 30 member countries share a commitment to democratic government and the market economy. The
OECD plays a prominent role in fostering good governance in the public service and in corporate activity.
http://www.oecd.org
World Trade Organization (WTO)
The global international organization dealing with the rules of trade between nations that aims to liberalize trade, negotiate
trade agreements and settle trade disputes.
http://www.wto.org
China
China Economic Information Network
A leading agency controlled by the government-run State Information Center that provides information about the nations
economic activities.
http://ce.cei.gov/cn
China Petroleum and Chemical Industry Association
The trade association that represents the petroleum and chemicals industry in China.
http://www.cpcia.org.cn
China National Chemical Information Center
The center is a branch of the National Engineering and Technology Library that provides comprehensive information
research, information services and computer application technology development for Chinas chemical industry.
http://www.cncic.gov.cn
National Bureau of Statistics
A government office that provides general and economic data.
http://www.stats.gov.cn/english/
25
National Development and Reform Commission

A trade department of the State Council with a mandate to develop national economic strategies, long-term economic
plans and annual plans, and to report on the national economy and social development.
http://www.ndrc.gov.cn
India
Chemicals and Petrochemicals Manufacturers Association (CPMA)
CPMA is the apex forum representing the Indian Petrochemical Industry. It provides real-time linkages between the
industry, the Government and the society.
http://www.cpmai.net
Confederation of Indian Industries (CII)
An industry whose goal is to create and sustain an environment conducive to the growth of industry in India and partner
with industry and the Government.
http://www.ciionline.org
Indian Department of Commerce
A government agency that formulates policies related to foreign trade, including import and export policies, multilateral
and bilateral commercial relations, state trading and export promotion measures.
http://commerce.nic.in
Indian Chemical Manufacturers Association
An association that fosters and promotes the development of the chemicals industry to government.
http://www.icmaindia.com
Indian Plastic Federation
A body formed to represent various interests of Indias plastic industry.
http://www.plasticfederation.org
Japan
Ministry of Economy, Trade and Industry (METI)
A government agency that overseas and implements economic and trade policy in Japan and provides information on
various industries in Japan.
http://www.meti.go.jp
Ministry of Finance
The Ministry of Finance is responsible for developing Japans fiscal and monetary policies to provide guidance for the
national economy.
http://www.mof.go.jp
Japan Foreign Trade Council Inc
A private sector organization that engages in a wide range of activities with the objective of contributing to the prosperity
of Japanese economy and the enhancement of international society through trade.
http://www.jftc.or.jp
Malaysia
Chemical Industries Council of Malaysia (CICM)
CICM is the umbrella body that represents chemical groups (ranging from oleochemicals, paints, cosmetic and toiletries,
fertilizers, petrochemicals, agriculture chemicals, industrial gases and pharmaceutical sectors), following restructuring in
2001 to establish a stronger and better representation of the Malaysian chemical industry.
http://www.cicm.org.my
26
Ministry of Industrial Development Authority (MIDA)

MIDA is the Malaysia Governments principal agency for the promotion and coordination of industrial development
in Malaysia. It is often the first point of contact for investors who intend to set up manufacturing and related services
projects in Malaysia.
http://www.mida.gov.my
South Korea
Bank of Korea (BoK)
The countrys central bank issues South Korea currency, coordinates monetary policy, maintains price stability and
manages foreign exchange reserves.
http://www.bok.or.kr
Korea International Trade Association (KITA)
A trade organization that provides trade information, tariff schedules and statistical data about South Koreas major
trading partners.
http://www.kita.org
Korea Petrochemical Industry Association
The trade association that represents the petrochemicals industry in South Korea.
http://www.mofe.go.kr
Taiwan
American Institute in Taiwan
The American Institute in Taiwan is a private, non-profit corporation established to promote relations between the US
and Taiwan.
http://www.ait.org.tw
Ministry of Economic Affairs
The ministry is responsible for administering industry, commerce, trade and international cooperation, small and medium
enterprises, investment, intellectual property, technological research and development, energy, water resources, mining,
standards, inspection, weights and measures and subsidiary enterprises.
http://www.moea.gov.tw
Photonic Industry and Technology Development Association (PIDA)
PIDA works with private enterprises and government agencies to improve the competitiveness of Taiwans optoelectronics
industry.
http://www.pida.org.tw
27
Comparative
Company
Data
Follow
the Industry Reports
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feed |onASIA-PACIFIC
Twitter @MergentIndustry
Company
Country
Ticker
Exchange
Primary SIC
India
500325
BSE
2911
1321
5171
2999
2865
2869
Mitsubishi Chemical Holdings
Japan
4188
TSE
2819
2899
3699
5172
2834
2821
South Korea
51910
KSE
2865
Sumitomo Chemical Co Ltd
Japan
4005
TSE
2819
2869
3089
2821
2879
2875
Asahi Kasei Corp
Japan
3407
TSE
2819
2821
2231
3081
3272
2823
Toray Industries Inc
Japan
3402
TSE
2823
2221
2821
3679
5039
1541
Mitsui Chemicals Inc
Japan
4183
TSE
2869
2821
2813
2819
2824
2865
Kao Corp
Japan
4452
TSE
2841
2844
2834
2899
4213
Shin-Etsu Chemical Co Ltd
Japan
4063
TSE
2821
2869
2819
8711
Nan Ya Plastics Corp
Taiwan
1303
TWN
2821
3089
2819
2824
Total Revenue - FYE - 1
EBITDA - FYE - 1
EBITDA - FYE - 2
EBITDA - FYE - 3
$74,592,479,242
$71,684,520,885
$60,189,302,570
$7,296,607,807
$7,908,599,509
$9,167,881,763
$33,897,067,178
$32,954,219,557
$39,109,590,124
$2,552,369,714
$2,540,799,278
$3,538,549,885
LG Chem Ltd
$22,007,067,757
$21,787,841,726
$19,569,857,561
$1,545,592,625
$1,789,790,641
$2,434,685,526
$21,738,109,311
$20,832,522,566
$23,745,933,770
$2,220,058,064
$1,872,534,029
$2,519,388,808
Asahi Kasei Corp
$18,385,754,109
$17,782,564,748
$19,178,665,354
$2,339,260,494
$1,964,666,971
$2,286,230,812
$17,804,584,134
$16,989,154,475
$19,366,084,105
$1,832,194,826
$1,665,989,791
$2,156,912,606
$15,172,016,296
$15,003,958,983
$17,725,469,075
$744,947,370
$619,035,209
$1,059,121,963
Kao Corp
$12,529,349,555
$11,756,649,064
$14,824,964,591
$1,937,070,325
$1,888,259,986
$2,309,673,394
$11,294,575,553
$10,940,816,215
$12,772,501,306
$2,596,121,191
$2,590,456,106
$2,803,723,070
$10,429,039,188
$10,361,528,854
$10,920,461,927
$1,653,743,854
$848,615,391
$1,654,537,075
Net Income - FYE - 1
EPS - FYE - 1
EPS - FYE - 2
EPS - FYE - 3
$3,846,146,791
$3,876,953,317
$4,327,464,483
$2.60
$2.62
$2.97
$312,421,973
$198,413,919
$432,596,708
$0.21
$0.13
$0.29
$1,208,215,312
$1,410,823,180
$1,872,503,747
$16.37
$19.03
$25.09
$358,237,016
-$544,966,086
$68,109,052
$0.22
-$0.33
$0.04
Asahi Kasei Corp
$981,366,169
$573,091,440
$679,822,691
$0.70
$0.41
$0.49
$577,488,495
$517,235,511
$782,857,899
$0.35
$0.32
$0.48
-$243,539,555
-$86,947,463
-$12,275,965
-$0.24
-$0.09
-$0.01
LG Chem Ltd
Company
Company
LG Chem Ltd
Kao Corp
Other SICs
3672
5162
$616,971,036
$612,623,594
$639,215,701
$1.20
$1.17
$1.22
$1,100,733,296
$1,127,937,677
$1,226,901,608
$2.59
$2.66
$2.89
$840,469,017
$125,405,027
$798,456,612
$0.11
$0.02
$0.10
Total Current Assets FYE - 1
Long-Term Debt FYE - 1
$21,477,190,211
$21,213,169,533
$19,494,897,787
N/A
N/A
N/A
$15,146,468,767
$15,542,117,794
$16,795,299,599
$6,711,230,498
$6,969,689,021
$9,359,941,586

Company
LG Chem Ltd
$7,637,197,665
$6,980,325,019
$6,262,373,613
$764,168,873
$1,119,339,503
$594,701,846
$12,037,730,624
$11,830,755,350
$13,435,123,018
$7,087,729,591
$7,545,362,531
$8,323,043,142
Asahi Kasei Corp
$8,626,287,676
$8,743,506,897
$8,798,819,063
$1,802,345,778
$1,994,478,139
$1,069,240,186
$8,916,591,708
$8,500,899,041
$8,853,311,180
$4,155,537,765
$3,230,137,204
$3,607,951,143
$7,527,802,020
$7,633,067,543
$8,061,797,934
$3,774,436,823
$3,424,507,303
$3,590,152,823
Kao Corp
$5,658,378,130
$5,728,660,466
$5,277,921,211
$763,011,521
$581,287,081
$1,219,648,183
$11,972,810,640
$11,016,581,822
$11,486,523,903
$73,213,001
$82,252,791
$17,725,176
$7,699,259,186
$6,822,000,233
$6,964,211,034
$3,447,873,871
$3,609,558,326
$3,611,073,904
Date FYE - 3
Company
Return on Equity (Most Recent Yr)
Profit Margin (Most Recent Yr)
Date FYE - 1
Date FYE - 2
11.47
5.16
31-Mar-2013
31-Mar-2012
31-Mar-2011
3.79
0.92
31-Mar-2014
31-Mar-2013
31-Mar-2012
LG Chem Ltd
10.96
5.49
31-Dec-2013
31-Dec-2012
31-Dec-2011
6.73
1.65
31-Mar-2014
31-Mar-2013
31-Mar-2012
Asahi Kasei Corp
12.42
5.34
31-Mar-2014
31-Mar-2013
31-Mar-2012
7.55
3.24
31-Mar-2014
31-Mar-2013
31-Mar-2012
-7.16
-1.61
31-Mar-2014
31-Mar-2013
31-Mar-2012
Kao Corp
9.84
4.92
31-Dec-2013
31-Dec-2012
31-Mar-2012
6.48
9.75
31-Mar-2014
31-Mar-2013
31-Mar-2012
8.87
8.06
31-Dec-2013
31-Dec-2012
31-Dec-2011
Notes to Comparative Data

- All figures are in United States dollars.
- N/A = Data Not Available.
- All figures are as reported by the company.
- N/L = Not Listed.

- Companies ranked by total revenue for the full year most recently reported.
Definitions
- Total Revenue = All revenues, including net sales, operating revenues, interest income, royalties, excise taxes etc.
- Long Term Debt = Debt due to be paid at a date more than one year in the future.
- EBITDA = Earnings before interest, taxes, depreciation and amortization.
- Return on Equity = The companys earnings divided by its equity (book value).
- EPS Cont Operations = Earnings Per Share as reported by company excluding extraordinary items.
- Profit Margin = The companys net income as a percent of revenues.
- Total Current Assets = All assets expected to be realized within the next year, includes cash, accounts receivable and inventories.
28
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Current Environment Key Points

Currency Conversion Table

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The Asia-Pacific Industry Reports are published by Mergent,

Mergent Business Press is an online bookstore of a

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center for high-grade petrochemical production, with BASF

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Tata Chemical Ltd

Chemical Corps (TSE: 8053) share price rose 7.99% to

KRW1.26 trillion (US$0.001 trillion) a year earlier,

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The CDA was to leverage the two companies expertise and

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gases, agricultural chemicals and fertilizers, inorganic

Chinas chemical industry is the countrys third largest,

South Koreas chemical industry is the worlds sixth largest

The Indian chemical industry is the countrys second largest

Taiwans chemical industry remains vital to the countrys

Japans chemical industry is the worlds third largest in

Production growth in the Asia-Pacific region was better

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Industry Report - Chemicals - May 2015

increase the capacity from 7.5 million tonnes to 15 million

Source: American Chemical Council

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Industry Report - Chemicals - May 2015

Market Trends & Outlook

in industries involved with building and construction,

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Industry Report - Chemicals - May 2015

Market Trends & Outlook

volatile organic compound (VOC) formations at lower

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Industry Report - Chemicals - May 2015

Market Trends & Outlook

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Industry Report - Chemicals - May 2015

Chinas chemical industry maintained solid growth over

Sinopec Corp (SSE: 60028)

Chinas chemical market continued to grow at double-digit

One of Asias largest refiner, China Petroleum and Chemical

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Industry Report - Chemicals - May 2015

Country Profile - China

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Industry Report - Chemicals - May 2015

Investors started to witness growth, as the Indian chemical

Indian conglomerate Reliance Industries Ltd (RIL) is

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Industry Report - Chemicals - May 2015

Country Profile - India

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Industry Report - Chemicals - May 2015

overseas, so as to access the growth that they dont have