Thailand Country Report 2007
Macro economy
Thailand has been run by the military led government again since Sept 19,
2006 after the coup took over the power from former Prime Minister
Thaksin Shinnawat who failed to gain the trust from public. New
constitution was then drafted and recently been approved by public
referendum with majority votes in August 2007. The next general election
date has been scheduled within 2007
In 2007, the Thai economy is likely to grow 4.0-4.5 %. Export was
the main driving force during the first half of 2007.The key factor
depressing investment was a low investor confidence on economic
opportunity and political uncertainty. The slow down signal was obvious in
the third quarter due to the stronger Baht and prevailing of global economic
risk. The investor and industrial confidence worsened after the rumor of
subprime mortgage crisis in USA. New monetary policies & financial
instrument were introduced & announced to dilute the impact from
currency appreciation. The situation in the South still makes the daily
headlines and unlikely to end in the foreseeable future. Pending FTA
negotiation with some countries has been suspended until the new
government has been formed. Despite the unstable politics the total export
vehicles at end of Aug was increased 20.5 % while the domestic car retail
sales dropped 9 %. Total car production increased 2 % respectively
However there was a signal for the economy pick up in the quarter 4 due to
the coming election, coming up of construction and high season for tourism
industry. The exports to major markets (except USA) namely Japan,
ASEAN and Europe performed well. Chemical products, plastic and steel
are broadened to China, India, Eastern Europe and Middle East.
Most Thai are looking forward to celebrate the 80th Birthday of our beloved
H.M. King Bhumipol. Souvenirs & related events will also stimulate up the
economy to a certain extent.The economy is expected to improve
significantly after the election or until new government is functional.
Table 1 below shows the economy index of 2007 comparing to the past
years.
Table 1 Key economic factors
2005
4.5
2006
5.0
2007 E
4.3
Inflation %
4.5
4.7
2.0
Baht/USD
39.97
37.93
34-35
Export ( BB )
109
128
N/A
Auto Production (MU)
1.12
1.19
1.25
GDP %
Chemical Industry
Continued increase of oil price is still the major constraint of the industry
while FTA & the stronger Baht were more favorable to Chemical Industry
due to the fact that import value has always been higher than export.
There is an increasing demand of analytical service from laboratories of
GLP standard in response to requirement of various international measures
& directives.
Most chemical laboratories are located in Bangkok. There are still
challenges in the area of international quality control, inter-laboratory
calibration, analytical bench marking, proficiency test schemes and
external quality assessment. Due to the limitation of sophisticate
equipments, a co-operative network of existing laboratories and the
concept of facilities sharing are needed for assignment in the area where
there is no supporting regional laboratory. Currently Ministries, agencies,
universities and other institutes are aware of the demand and many are
ready to provide service as demonstrated in Table 3.
Table 2 Import & Export value
Type
1.Basic Chemical
1.1 Inorganic
1.2 Organic
1.3 Miscellaneous
2. Down stream
Chemicals
2.1 Fertilizer
2.2 Dyestuff
2.3 Cosmetic
Toiletries
2.4 Surfactants
Type
1.Basic Chemical
1.1 Inorganic
1.2 Organic
1.3 Miscellaneous
2. Down stream
Chemicals
2.1 Fertilizer
2.2 Dyestuff
2.3 Cosmetic
Toiletries
2.4 Surfactants
Tariff
Export (MB)
2006
2007
(6 months)
(6 months)
Change
(%)
28
29
38
5,158
9,370
6,636
7,420
10,844
7,597
44
15
14
31
32
1,244
4,409
869
4,526
-30
-2
33
34
14,504
6,069
15,847
15,221
9
151
Tariff
Import (MB)
2006 (6
2007 (6
months)
months)
Change
(%)
28
29
38
20,015
44,114
28,967
21,669
45,389
31,148
8
2
7
31
32
15,517
16,571
25,149
17,308
62
4
33
34
8,319
7,398
9,351
7,484
12
1
Table 3 Chemical analytical service/Description
Name/Description
Scope
Minister of Public Food & beverage
Drugs/Narcotics
Health
Biological
products
Cosmetic
Toxicology
Risk assessment
Health/Drugs/Food
Chulalongkorn
Environment
University
Pesticides
Thai Automotive Automotive Part
Institute
Chemical trace
Thai Textile
Association
Environment
Federation of
Petroleum
Thai Industries
Chemicals
Quality
system
ISO/IEC
17025
ISO 15189
OECD/GLP
Accreditation
NATA
Australia
BLQS,
Thailand
OECD/GLP Dr. Nehring
(Partially)
Institute
ISO/IEC
17025
ISO/IEC
17025
ISO/IEC
17025
TISI
TISI
TISI
DIW
Basic Chemicals
Basic chemical industries play the role of fundamental industries
serving as raw materials for various industries. There are various basic
chemical industries in Thailand such as Chlor-Alkali, Sulfuric acid,
Hydrogen peroxide, Hydrochloric acid, Citric acid, Formic acid, Glutamic
acid, Stearic acid, Oleic acid, Calcium hydroxide, Silicon dioxide, Alcohol,
Glycerine, Potassium carbonate, Potassium dichromate, High strength
Hypochlorite, Sodium Hypochlorite, Calcium Hypochlorite, Potassium
hydroxide etc. Among these industries, Chlor-Alkali industry and Sulfuric
acid industry are very strong to bonding together and versaltile in
application varieties and tonnages.
Chlor-alkali Market
Thailand now is a net Caustic Soda exporting country, with the local
production capacity of around 785,000 DMT and the demand is around
600,000 DMT. The excess is export in both liquid and solid forms from the
two big producers. The main Caustic Soda application is in Rayon,
Inorganic chemical, textile, pulp & paper and petrochemical. Normally the
growth rate will follow the GDP, therefore, it is anticipated the demand in
2008 will growth by at least 3%.
As Caustic Soda can be easily traded intra-regionally, therefore the
domestic price will be in line with the international price trend. The high
demand in the region and the new regulation to lift up the export subsidize
from Chinese Government has made the price remain strong at the level of
300 USD and above.
The Chlorine local production is around 700,000 MT whereas the
demand of Chlorine and its derivative is around 600,000 MT. To export
Chlorine and HCl is quite troublesome and, as a result, most of the plants
cannot run at full scale.
Thailand Chlorine derivative biggest proportion is PVC and
followed by Poly Carbonate, Epichlorohydrine, Hydrochloric acid, Sodium
Hypochlorite and Chlorinated paraffin.
The demand of Chlorine derivative, HCl, is significantly dropping
in Mono Sodium Glutamate industry as there are cheap MSG and cheap
intermediates, Glutamic Acid, coming from China and Vietnam.
Furthermore the economic slowdown seriously affected the construction
business and subsequently the steel industry.The HCl demand dropped by
at least 15%.
Sulfuric Acid Market in Thailand
The consumption of sulphuric acid Thailand totals as estimated at
around 600,000 tons/yr, the vast majority of acid being produced on site for
captive use. Sulphuric acid consumption is forecasted to rise by 4-5 % in
the next year, the demand from lactic acid sector is expected to rise by
20,000 ton/yr and 30,000 ton/yr in 2009.
The production of sulphuric acid is estimated at around 500,000
ton/yr, around 400,000 tons/yr from sulphur burner and around 100,000
ton/yr as by product from base metal smelters, produced as a means of
reducing sulphur dioxide emission.
During last year, base metal smelters produced sulphuric acid at
around 130,000 ton/year from both copper and zinc smelting. And
produced at around 50,000 ton in the fist haft of this year from only zinc
smelting, because of Thai copper Ltd., the biggest sulphuric acid producer
in Thailand, has temporarily shut down.
Import of sulphuric acid fell by 80,000-100,000 tons/yr from Korea,
Japan, Malaysia, Italy, China and other countries, up to local production
capacity. The primary use remains in Textile, Zinc, Carprolactam, Lactic
acid, Citric acid, Fertilizer and Aluminium sulphate.
The sulphuric acid market in Thailand has remained tight, especially
because of in both competitive pricing and sulphur raw material prices
being higher than average level for the past year.
Sulphur spot prices over $200/ton versus $100/ton up on the six
months ago; this is the 20 years record peak because of peak requirement in
the phosphate fertilizer business of China and India. Di-ammonium
phosphate is booming; prices are at an unheard-of $440/ton in major
market -- doubling the usual level -- and demand remains strong.
As a result, most acid plants currently in operation have to decrease
capacity of about 40-50 % and will temporary shut down later.
Paint & Dyestuff
The consumption of overall paint products declined resulting from many
negative factors such cost increases (oil price and raw material costs),
suspended projects, lower FDI, lower domestic consumption, etc. It seems
to be a prosperous year for wood finish makers who enjoy the business
from the significant growth of furniture export.
Automobile industry reported less domestic consumption. Only export is
increased as planned.
It is expected that the consumption will be back to normal after return of
consumer’s confidence and a new government is fully operational.
The real estate shows signal of some recovery in the 4th quarter.
The continued increase of solvents & pigments prices was the major cost
up of all paint products.
Dyestuff producers encountered a tough time due to the short supply of raw
materials from China as they more focus on producing alternative materials
to serve the important event of hosting the Olympic 2008. Many of textile
businesses in Thailand shut down.
In response to the higher measures and directives, Paint & Dyestuff makers
have been actively involved in GHS training programs in compliance with
forthcoming regulations.
Table 4 Paint consumption
Unit in Tons
Decorative
2006
160,000
2007
144,000
change
-10 %
Automotive (body)
22,000
21,500
-2%
Powder Paints
14,000
11,200
-20%
Wood finish
36,000
45,300
25%
Packaging
13,000
12,000
-8%
Coil Coating
12,000
11,000
-8%
Thinners
100,000
100,000
0%
Others (Flexo,Traffic,
Marine, Floor, Roof, etc)
30,000
30,000
0%
Total
403,500
375,000
Table 5 Movement of raw materials for Paints
RM
TiO2
Alkyd Resin
Latex
Epoxy Resin
Polyester Resin
Acrylic Resin
Pigments
Solvents
Additives
Extenders
Packaging
Tons in
2005
60,000
50,000
32,000
12,000
3,000
4,000
3,000
155,000
6,000
30,000
N/A
Change in
2007
-15%
-10%
-10%
-10%
-10%
-10%
-15%
-10%
-10%
-10%
-8%
Price change in
2007
1-2 %
5%
2-5 %
10%
15%
10%
-2%
6%
15%
0%
-5%
Coating Care
 New regulations
There are quite some new coming new Acts which have passed or
awaiting legislation to be implement soon such as Product Liability
Act, Insurance Policy for Hazardous Material transportation.
 GHS Implementation
Paint makers have been actively involved in training programs
organized by the Industrial Works Department and chosen as a focus
group in pilot program to be fully compliant with the Act as a
prototype for other industries.
Soap & Detergent
Soap Market (As of July)
The market size of skin cleansing market (bar and liquid) as of year-to-date
July 2007 is 24,482 tons which equal to 3,243 M Baht. Bar soap
contributed 18,113 tons (2,094 MB), while Liquid soap contributed 6,369
tons (1,149 MB).
Bar Soap
Comparing YTD this year vs. last year, bar soap market grew by 4.2% in
volume and 4.3% in value. Despite low growth (0.5%) in traditional trade,
modern trade was the key growth-driver at 8.3%. As of YTD July 2007,
bar soap market value is contributed from modern trade 62% and
traditional trade 38%.
Three segments in bar soap market are Beauty, Health and Baby, which
had market contribution of 52.2%, 39.9%, and 7.9% respectively. Health
segment enjoyed the highest value growth at 8.4% this year while Baby
segment grew at 5.3%. Beauty segment had moderate growth at 1.2%.
For corporate shares, Unilever was still a market leader with a declining
trend. YTD value share decreased -4.7% (from 34.8% to 30.1%). Other key
players i.e. Colgate ’s share gained +2.9% which was mainly from Protex
brand, and Berli Jucker’s share gained +1.2% mainly from Parrot
Botanicals. On the contrary, Cusson’s value share dropped from 7.5% to
7.0%.
Recently, bar soap market had a very intensive promotion from all key
players e.g. 4F1, 2For, and price discount to increase purchase volume.
Liquid Soap
Liquid soap market as of YTD July 2007 grew by 8.4% in volume and
6.9% in value. Main growth-driver channel was modern trade in which had
value growth at 6.9%, while open trade declined by -9.4%. Contribution of
liquid soap to modern trade was 94.5%, while traditional trade accounted
for 5.5%.
In liquid soap market, health and baby segments are the platforms which
showed double-digit growths in both segment (14.2% and 13.5%
respectively), while beauty segment grew only at 4%.
Unilever still maintained its leadership positioning with 28.7% value share
despite share decline by -1.3%. Lion had the second market share at 14.2%
(slightly dropped from last year by 0.3%). Colgate, Baby Mild, and Bio
gained share this year.
Source:
 AC Neilson Market share data as of YTD July 2007.
 Personal Wash Market Share Analysis (Period end - July 2007), from
UTT PW Marketing team.
Detergent Market (As of Aug)
The overall market size for the country’s detergent market as of Aug 2007
is 133,000 tons, equivalent to 8,294 M Baht. Comparing YTD this year vs.
last year, growth is relatively flat. Full year 2007 is projected with subtle
increases when purchasing is stimulated through 4 th quarter promotion
activities.
Unilever is, still, the key market driver, stimulating total market growth
through its campaigns and product innovations. Its corporate YTD value
share is 61.3% (dropped 1.4%) from a year ago. The company continues to
be the leader in media spending. The share of voice-media spending, is
18%, 2% top-up on 2006 spending for the same period.
Market dynamic resulted mostly from fierce price competitions and
promotion activities from all players. The price competition has resulted in
average market price down to 95 Index.
For segment share, conventional powder has continuously declined for 8
consecutive years. From overall portfolio contribution, conventional
powder is 48% vs. 50% in 2006. Concentrated powder grows from 42% to
44%, due to the expansion of machine wash and the belief in the product
efficacy comparing to conventional powder. Liquid is still a niche market
at 7% contribution.
Looking at the market by channel, Modern Trade performs relatively poor
in the first half year compared to YTD last year. Indirect trade although to
a less degree also shows negative trend at 0.5% decline.
Overall, detergent market is highly competitive. Key players in the market,
such as Kao and Sahapat, have increased their budgets to support product
re-launch. With intensive penetration, to survive, the manufacturers cannot
just do promotion or pricing, but have to build brand and introduce new
innovation or new information to the market with good marketing strategy.
Pesticides & Fertilizer
It is another down turn year for both categories. Not only the oil price that
hurt the
industry. Other key factors which depressed the growth of this sector were
as follows:
 Diminished purchasing power due to the discontinued funding
policy.
 Bad climate for field crops.
 Lack of advanced technology to improve productivity.
 Limited subsidy from state comparing to other developed countries.
 The farming profit dropped due to the more competitive import.
 Limited competency to do own market development.
 Short of long term plan from government to solve the redundant
problems.
 More frequent natural hazards due to the climate change.
 Ineffective support funding due to the corruption.
It is possible that the situation will be better if the new government is
serious to deploy professionals to solve the problem honestly.
Outlook of Crop Protection Business
The pesticide market (not included the fumigant product and plant
growth regulator) in 2006 is approximately 92,897 metric tons which is
19,907 metric tons over 2005 due to the long drought conditions in 2005.
The actual consumption of pesticides in 2006 is estimated only at 5-6 %
increased from 2005 due to high inventory carried over into 2007 by
retailers. Herbicide remains the largest segment being substitution for lack
of labor force.
Table 5 Distribution of the crop protection market
2005
Pesticide
2006
2007 (Jan-Jul)
Volume
(kg)
Value(Baht)
Volume
(kg)
Value(Baht)
Volume
(kg)
Value(Baht)
16,401,154.29
2,929,675,390.55
20,487,097.36
3,856,078,592.34
12,710,047.58
2,308,892,905.98
7,929,149.65
1,579,017,965.08
9,380,848.62
1,720,357,894.34
6,162,769.80
1,015,324,122.68
47,507,410.16
5,485,729,778.23
62,129,173.45
6,820,815,586.46
55,176,186.71
5,929,161,785.14
521,103.00
132,407,228.03
336,625.00
96,470,531.08
257,420.00
64,555,190.00
631,245.00
96,524,701.00
563,605.20
61,298,037.00
469,005.00
30,623,800.44
72,990,062.10
10,223,355,062.89
92,897,349.63
12,555,020,641.22
74,775,429.09
9,348,557,804.24
Insecticide
Fungicide
Herbicide
Acaricide
Mollusicide
Total
Source: Office of Agricultural Regulation, the Department of Agriculture
In first half-year of 2007, the agricultural business faced the liquidity
problems due to the farming sector had been damaged from flooding since
quarter 4th of 2006 and its delayed of paddy planting season in 2007 and
the significant impact of increasing costs of chemical fertilizers both local
and import, while the farm gate price of agricultural product are not
favorable to compensate the increased costs. The high cost of fuel and
strong currency of Thai Baht were other causes of concern. However, the
Jan-July market of herbicide seems to increase comparable to the same
period of 2006 due to more regular rain fall. Also, farmers applied early
use of herbicide although some area in northeastern was still affected by
droughts. Overall, the trend of herbicide use is still increasing whereas
insecticide and fungicide uses remain stagnated because of low outbreak of
pests when compared to 2006 such as Brown Plant Hopper in paddy,
Golden Apple Snail in paddy, red spider mite infestation in fruit crops.
It is expected that the crop protection market of 2007 will be close
to that of 2006 but lower stock will be carried over into 2008. Herbicide
will retain its highest position while insecticide and fungicide will slightly
decline. The trend of pesticide prices is slightly on the increase because of
the new taxation policy of production and export goods from China. .
Other Chemicals
Thailand other chemicals consist of various chemicals and related
chemical industries such as Polyester, Textile chemical, Nitro cellulose,
Alcohol, Glue, Latex, Essential oil, Cosmetic, Food and Pharmaceutical
chemical ingredients, Chemical Tank and Cargo, Shipping, Forwarder, and
Chemical Trader. Many of outside and inside Thailand negative factors
have influence on downsizing industry growth such as increasing of oil
price, higher raw material cost. Moreover, especially for Thailand
exporter, the appreciation of baht value affected entire industry. We have
to also mention Thailand political, coup consecutively affected many
projects suspension and pending policy. Therefore, the overall operation
and its outcome were declined, only some were stable or had slightly
growth for industries. Expecting new government in early next year, by
their policy, will make more confidence to Thai industries to moving
forward and consumers to starting to have more consumption.
Market
Across the wide range of products in Thailand Other Chemicals, the
import chemical products had appreciated from stronger baht value but had
just slightly growth because of other negative factors that we have
mentioned earlier. The competitive market always around in this year.
Essential oil, Cosmetic, Food and Pharmaceutical Chemical ingredients
were normal consumed only 3%growth. For the importer there were no
extra need in domestic consumption but for the exporter, they had
increased in exporting and continuing slightly growth. Polyester were
affecting by the competition of Thai garment exporters with other country
competitors in surrounding regions especially China, India and Vietnam.
Decreasing export number of Thai Garment affected the decreasing number
of Polyester consumption. However, Thai exporters can still export raw
materials to the world market. Chemical Logistics such as Chemical Tank
and Cargo, Shipping, Freight Forwarder were affected by higher cost from
worldwide increasing oil price, therefore, they need to reduce cost and
manage more efficiency.