Lower PE run rates by Asian producers fail to support market

12-Oct-11
Lower polyethylene production in Asia has failed to support the market, as per Platts. This is because of weak demand due to uncertainty surrounding the eurozone sovereign debt issue and the global economy. This has affected export orders for finished plastic products in main markets like China and Vietnam. As a result, buyers are purchasing cargoes on a need-to basis, preferring to keep inventory low. Indonesia's Chandra Asri shut its petrochemical complex for a 30-35 day turnaround. It has a 536,000 tpa PE plant. On October 15, South Korea's Honam Petrochemical will also shut its 370,000 tpa HDPE/LLDPE swing plant in Daesan for a 15-day turnaround. Hanwha Chemical will idle at least a third of its 335,000 tpa liner low density polyethylene (LLDPE) production capacity for technical tests starting October 18. Taiwan's Formosa Plastics is also operating at reduced rates of around 70-80% of capacity due to a lack of ethylene feedstock from its supplier Formosa Petrochemicals Corp. FPC's No. 3 steam cracker is expected to resume operations later this week from a turnaround that started mid-August. Despite these shutdowns and supply cuts, the Asian PE market is still lackluster. While some market participants had expected demand to pick up after the week-long Chinese National holidays last week, buyers did not rush back into the market to restock.
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