Singapore’s petrochemical exports in September declined by 8.3% year on year to Singapore dollar (S$) 808.7 million ($632 million), with future production facing risks amid prolonged shipping disruptions in the Strait of Hormuz.
• Feedstock uncertainty, weak margins threaten Singapore petrochemical sector recovery
• Sept overall exports surge 68.4% on robust AI-related electronics demand
• Q4 economic growth seen slowing largely on high comparison base
September marked a 19th consecutive month of year-on-year declines in petrochemical exports, with annual growth last recorded in February 2025, Enterprise Singapore data showed.
The decline in petrochemical shipments last month, however, eased from a 21.9% contraction recorded in August.
The downturn in the southeast Asian country’s petrochemical sector is expected to persist as the continuing US-Iran conflict adds to feedstock uncertainty and weak margins, according to research firm BMI, a unit of Fitch Solutions.
“We now expect a preliminary resolution [to the US-Iran war] in Q1 2027, from Q3 2026 previously. This will delay the recovery in Singapore’s petrochemicals sector, which remains constrained by feedstock uncertainty and weak margins,” BMI said.
Renewed disruptions to shipping through the Strait of Hormuz could further constrain feedstock supplies to Singapore’s petrochemical sector and delay its recovery, it added.
Singapore is a leading petrochemical manufacturing and trading hub in southeast Asia, with more than 100 international chemical companies operating on Jurong Island, including ExxonMobil and Aster Chemicals & Energy.
CHEMICALS OUTPUT CONTRACTS IN Q3
Chemicals was one of only two manufacturing clusters, alongside biomedical manufacturing, to contract during the third quarter, according to the Ministry of Energy, Trade and Industry (METI) on 14 October.
Overall Q3 manufacturing growth slowed to 7.5% year on year from 12.9% in Q2, METI said.
Singapore posted a 5.4% annualized Q3 GDP growth, slowing from a 6.2% expansion in Q2, advance estimates from METI showed.
“Growth during the quarter was supported by output expansions in the electronics, precision engineering, transport engineering and general manufacturing clusters, which outweighed output declines in the chemicals and biomedical manufacturing clusters,” METI said.
The weakness followed a 12.7% year-on-year decline in chemicals output in August, when petroleum production was affected by plant maintenance and petrochemicals production remained constrained by softer demand and feedstock supply disruptions.
SEPT NODX GROWTH ACCELERATES
Singapore’s September overall non-oil domestic exports (NODX), meanwhile, surged by 68.4% year on year to S$25 billion, accelerating from the revised 46.1% increase recorded in August, Enterprise Singapore data showed.
In the first nine months of 2026, NODX grew by 27.6% year on year.
September electronics NODX more than doubled, driven by disk media products, integrated circuits (ICs) and personal computers (PCs).
Exports of disk media products more than quadrupled year on year, while PC shipments more than doubled; and IC shipments jumped by about 75%, the agency said.
Non-electronic NODX, which includes petrochemicals and pharmaceuticals, expanded by 54.2% year on year to S$16.8 billion in September, accelerating from an 11.9% increase in August.
The increase was mainly driven by shipments of structures of ships and boats, non-monetary gold and specialized machinery, the agency said.
NODX to most of Singapore’s major markets strengthened in September, with growth posted in nine out of top 10 destinations.
Exports to Hong Kong more than doubled while shipments to Taiwan and South Korea surged by 96.9% and 96.0%, respectively.
Exports to the US rose by 73.2%, driven by shipments of disk media products, specialized machinery and PCs, while shipments to China increased by 36.8%.
AI SUPPORTS GROWTH OUTLOOK
The strength in technology-related exports comes amid expectations that the artificial intelligence investment cycle will continue to support Singapore’s manufacturing and trade-related services, BMI said.
Singapore’s 2026 GDP growth forecast was raised to 5.7% from 5.5% following upward revisions to first- and second-quarter growth, while the 2027 forecast was maintained at 3.5%.
“We continue to expect growth to slow in Q4 2026 largely due to a high base of comparison rather than weakening fundamentals,” BMI said.
Major US technology companies have indicated robust spending on AI infrastructure, pointing to a more durable investment boom that should support Singapore’s manufacturing and trade-related services, BMI said.
Downside risks from the US-Iran conflict and tighter global financial conditions are expected to weigh on the economic outlook into 2027, it said.
The US Federal Reserve is expected to raise policy rates by another 50 basis points by the end of 2027, compared with BMI’s previous forecast for a 50-basis-point cut, the research firm said.
The tighter US monetary policy outlook is expected to weigh on Singapore’s investment and growth outlook, BMI said.
“More aggressive tightening would pose downside risks to investment and growth by raising domestic borrowing costs in Singapore,” it added.
Source: ICIS by Nurluqman Suratman,
