PE, PP buyers in Asia await impact of supplies from new capacities

Trading is lackluster in Asia’s PP and PE markets as buyers await the onslaught of supplies from new capacities coming on stream. As per Chemorbis, buyers are waiting on the sidelines, refusing to buy beyond their needs on expectations that a new wave of capacities in Asia and Middle East will begin to weigh down the market in the month ahead. This has kept spot prices for both PP and PE in major Asian markets at levels well below producers’ theoretical break-even point based on spot monomer prices. Given the prevailing spot prices for ethylene and propylene, theoretical cost calculations suggest that homo-PP producers are offering to China, prices US$105-165/ton below their theoretical production costs, offers for HDPE film stand US$105-205/ton below their theoretical production costs and offers for dutiable LLDPE film origins fall US$35-105/ton below their theoretical production costs. Traders active in Southeast Asia are reported to be currently offering some materials for pre-marketing from two new PE plants in Qatar, Qatofin’s new 450,000 tpa LLDPE film and Qatar Chemical’s new 450,000 tpa HDPE plant, with several done deals. Trial runs are reported to be conducted at Borouge 2 complex, with commercial start up scheduled for late June/early July. The complex includes a 800,000 tpa PP plant and a 560,000 tpa HDPE/LLDPE swing plant. In Iran, Kavian Petrochemical has reportedly begun test runs at its new cracker with an ethylene capacity of 2 million tpa while Iran’s Ilam Petrochemical is expected to begin test runs at its new 300,000 tpa HDPE plant in either May or June. Zhenhai Petrochemicals is to begin operations at its new 250,000 tpa LLDPE plant at the beginning of May. India’s IOC is expected to begin commercial production at its new complex in Panipat by the end of April with an ethylene cracker capacity of 800,000 tpa and a propylene capacity of 650,000 tpa, a 600,000 tpa PP plant and two PE plants with a combined capacity of 650,000 tpa. In Thailand, Siam Cement Group recently began commercial production at its new 400,000 tpa HDPE plant and its new 400,000 tpa PP plant, while Thai PTT Petrochemicals is looking to begin commercial production at its new 300,000 tpa LDPE plant. Test runs are also underway at PetroVietnam’s new 150,000 tpa PP plant, expected to begin commercial production in H1-June. Two new crackers have also recently begun production in Southeast Asia, Shell’s new cracker in Singapore with an ethylene capacity of 800,000 tpa and a propylene capacity of 450,000 tpa and Map Ta Phut Olefins’s new cracker in Thailand with an ethylene capacity of 900,000 tpa and a propylene capacity of 800,000 tpa.