Falling Asian lldPE prices squeeze pft margins for producers

18 November 2004 08:21  [Source: ICIS news]

SINGAPORE (CNI)--Falling Asian linear low-density polyethylene prices (lldPE) are putting pressure on the already weak profit margins for producers, traders told CNI on Thursday.

On Thursday, Asian lldPE prices were pegged at around $1080/tonne CFR China, dropping from above $1100/tonne a week ago. The prices were weighed down by a deal done at $1020/tonne late last week.

ExxonMobil was said to have sold a cargo of between 10 000-30 000 tonne to a Chinese buyer at $1020/tonne, sharply lower than other sellers in the spot market. The sharp discount was attributed to high inventory at ExxonMobil.

Asian ethylene prices are pegged around $1100/tonne CFR North Asia.

"Many lldPE buyers are now holding out for lower prices or hoping to pay the same price ExxonMobil sold at," a trader said.

The weakening margins are expected to affect independent polyethylene (PE) producers the most, he said.

Indonesia’s largest PE maker PT Petrokimia Nusantara Interindo's (Peni) planned to extend the shutdown of its 450 000 tonne/year PE plant indefinitely due to pressure from high ethylene costs and falling PE prices in the region. Peni is an independent PE producer, which buys most of its ethylene supply from the only cracker operator in Indonesia, Chandra Asri.

The restart of the plant had already been delayed twice, with the latest start-up date on 25 November after the Lebaran holidays in Indonesia. The plant has been shut since early October.

The other non-integrated PE producer in Asia is JG Summit in the Philippines.

By: Edgar Ang
+65 6780 4359

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