Thailand¡äs Petrochemical Industry Faces Dual Pressures from Exchange Rates and Tariffs
2026-1-19
Recently, market analysts noted that as Thailand¡äs economic growth rate is expected to slow from 2.2% in 2025 to 1.5% in 2026, the petrochemical and plastic industry, which accounts for about 20% of the country¡äs GDP, is facing severe challenges. The core difficulties confronting the sector stem from dual pressures of currency appreciation and trade barriers.
According to market participants, the exchange rate shock directly erodes profit margins. The Thai baht¡äs appreciation against the US dollar by 8.2% in 2025 has made it the second strongest currency in Southeast Asia. For petrochemical and plastic exporters settled in US dollars, this translates to a direct price competitiveness decline of over 8%. Meanwhile, the 19% tariff imposed by the US on Thai goods, which took effect last August, has created a dual pressure. Under these circumstances, Thailand¡äs export growth rate in 2026 is expected to plummet from 12% in the second half of 2025 to just 0.6% now.
The demand side exhibits structural weakness. Although Thailand¡äs manufacturing PMI remains in the expansion range at 57.4, external order growth has significantly slowed when the domestic market also faces pressure. The persistently low inflation environment reflects insufficient consumer demand. For the petrochemical industry, this implies reduced willingness to purchase raw materials and potential strain on plant utilization rates.
Industrial response strategies require multi-dimensional adjustments. On the cost side, companies need to reassess raw material procurement strategies, considering increasing the proportion of local sourcing. On the production side, enhancing the capacity of high-value-added specialty chemicals and bio-based materials has become a transformation trend. On the market side, expanding into the ASEAN internal market as well as emerging markets such as the Middle East and Africa is a top priority. At the policy level, the Bank of Thailand may further reduce interest rates to stimulate the economy, but the industry more urgently needs targeted export tax rebates and industrial upgrading support.
This adjustment will test the supply chain resilience and product innovation capabilities of Thailand¡äs petrochemical industry. Companies that can swiftly adjust their product structure and optimize cost control will gain new competitive advantages in this round of industry reshuffling.
According to market participants, the exchange rate shock directly erodes profit margins. The Thai baht¡äs appreciation against the US dollar by 8.2% in 2025 has made it the second strongest currency in Southeast Asia. For petrochemical and plastic exporters settled in US dollars, this translates to a direct price competitiveness decline of over 8%. Meanwhile, the 19% tariff imposed by the US on Thai goods, which took effect last August, has created a dual pressure. Under these circumstances, Thailand¡äs export growth rate in 2026 is expected to plummet from 12% in the second half of 2025 to just 0.6% now.
The demand side exhibits structural weakness. Although Thailand¡äs manufacturing PMI remains in the expansion range at 57.4, external order growth has significantly slowed when the domestic market also faces pressure. The persistently low inflation environment reflects insufficient consumer demand. For the petrochemical industry, this implies reduced willingness to purchase raw materials and potential strain on plant utilization rates.
Industrial response strategies require multi-dimensional adjustments. On the cost side, companies need to reassess raw material procurement strategies, considering increasing the proportion of local sourcing. On the production side, enhancing the capacity of high-value-added specialty chemicals and bio-based materials has become a transformation trend. On the market side, expanding into the ASEAN internal market as well as emerging markets such as the Middle East and Africa is a top priority. At the policy level, the Bank of Thailand may further reduce interest rates to stimulate the economy, but the industry more urgently needs targeted export tax rebates and industrial upgrading support.
This adjustment will test the supply chain resilience and product innovation capabilities of Thailand¡äs petrochemical industry. Companies that can swiftly adjust their product structure and optimize cost control will gain new competitive advantages in this round of industry reshuffling.