12 July 2005 09:00 [Source: ICIS news]
SINGAPORE (CNI)--Indonesia's Petrokimia Nusantara Interindo (Peni) plans to continue operating at least one of its three lines at its 450,000 linear low-density polyethylene (lldPE)/high-density PE (hdPE) swing plant at Merak, West Java, until end-July, a company official told CNI on Tuesday.
Peni restarted its 125,000 tonne/year No 1 line and 125,000 tonne/year No 2 line in early May after securing ethylene at a low price and had planned to operate at least one line until end-June. However, the official said that operations at the plant would be extended until end-July as several cargoes of ethylene were recently procured.
“We plan to operate both lines alternately depending on market demand,” the official said.
Peni shut its No 1 and No 2 lines in October 2004 on the back of rising ethylene costs and poor margins. Its No 3 line has been shut since June 2004. The company also operated the plant for several days in March and April when cheap feedstock was obtained.
“We plan to operate the plant as long as we can using feedstock purchased from the spot market. However, we are also carrying out negotiations with producers to purchase competitively priced feedstock on a contract basis,” the official said. He added that negotiations were likely to be concluded in one to two months.
Ethylene prices are pegged at $840-870/tonne CFR Southeast Asia, down some $300/tonne from $1,150-1,170/tonne CFR Southeast Asia in February, according to global market intelligence and price reporting service ICIS-LOR, a sister company of CNI.
Non-integrated PE producers, which saw negative margins late last year, are now enjoying margins of about $120/tonne, above the break-even margin of $100/tonne.
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