Indonesia's Peni delays PE plant restart on poor margins

24 January 2005 07:01  [Source: ICIS news]

SINGAPORE (CNI)--Indonesia’s largest polyethylene (PE) producer Petrokimia Nusantara Interindo (Peni) will not restart operations in February 2005 as planned due to poor margins and insufficient feedstock, a company official told CNI on Monday.

 

Peni shut its 450 000 tonne/year linear low-density PE (lldPE)/high-density PE (hdPE) plant at Merak, West Java in October last year due to poor margins. Plans to restart the plant have been postponed several times over the past three months as margins have not improved. 

 

“The spread between PE and ethylene has hovered around $40-50/tonne over the past few months, and that makes it unfeasible to restart the plant,” he said.

 

He added that the company would restart the plant only if there is a minimum spread of $100/tonne, but that looks unlikely in the current bullish market. Last Friday, the price of ethylene was pegged at $1030/tonne CFR Taiwan while hdPE was at $1050/tonne CFR China.

 

A severe feedstock shortage would have made it difficult for Peni to restart the plant even if it wanted to.

 

At least 12 000 tonne/month of ethylene is required for the plant's two operational lines, but only 5000-6000 tonne has been secured. The plant’s third line has been mothballed.

 

“Unless market conditions change dramatically in our favour, we will be unable to restart the plant,” the official said.

By: Caroline Sin
+65 6780 4359

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