Indon's Peni to operate PE line for one month from 1 May

22 April 2005 08:59  [Source: ICIS news]

SINGAPORE (CNI)--Indonesia’s Petrokimia Nusantara Interindo (Peni) plans to restart one line at its 450,000 tonne/year polyethylene (PE) plant at Merak, West Java, on 1 May after securing several cargoes of ethylene feedstock, a company official told CNI on Friday.

 

The 125,000 tonne/year No 1 line at the linear low-density PE (lldPE)/high-density PE (hdPE) swing plant will run for one month. The line was operational from 28 March to 20 April before shutting on a lack of feedstock supply, said the official.

 

The company shut its No 1 line and its 125,000 tonne/year No 2 line in October 2004 due to poor margins and rising ethylene costs. The 200,000 tonne/year No 3 line has been shut since June 2004. The plant was also operational for 10 days in February.

 

The official said the company would operate the No 1 line only until end-May unless more feedstock can be secured. Peni might also restart the No 2 line for a few days depending on market demand.

 

The company shut the two lines in October 2004 after ethylene prices hit $1,300/tonne FOB Southeast Asia in September. The negative price spread between ethylene and PE then was pegged at $70/tonne.

 

Margins, however, have improved dramatically over the last month. Asian ethylene prices fell to around $910-930/tonne CFR Southeast Asia on 15 April from $1,170/tonne CFR Southeast Asia in March, widening the margins for PE producers, according to global price reporting and market intelligence service ICIS-LOR. 

 

PE prices are currently pegged at $1,080-1,110/CFR Southeast Asia. An ethylene deal was done this week at $860/tonne CFR Indonesia, according to a market source.

 

On Peni’s plans given the bearish feedstock prices, the official said: “We plan to purchase ethylene on a contract basis so that we can keep our plant in operation for a longer period, but we are still looking suitable terms. In the meantime, we will continue to purchase ethylene from the spot market to take advantage of the falling prices.”

By: Caroline Sin
+65 6780 4359

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