Oversupply to hit polyolefins by 2013 - Sumitomo

18 April 2008 07:00  [Source: ICIS news]

SHANGHAI (ICIS news)--Polyolefins are expected to be oversupplied globally by 2013 as demand growth will lag behind the rapid capacity expansions in the Middle East, an executive of Sumitomo Chemical said on Friday.

“The oversupply will exert downward pressure on global polyolefins prices but we are not overtly concerned because we have feedstock cost advantage,” said Sumitomo Chemical business development manager James Wang in Mandarin on the sidelines of the Chinaplas exhibition.

The supplier would have to follow the market when it fell but it would not compromise its product quality and services, James added.

Sumitomo Chemical has the exclusive right to market polyolefins produced by Rabigh Refining and Petrochemical Co (PetroRabigh) outside the Middle East.

PetroRabigh is a 50:50 refinery and petrochemical joint venture in Saudi Arabia between Sumitomo Chemical and state-owned Saudi Aramco.

Around 10-15% of PetroRabigh’s polyolefins output would be sold in the Middle East and the balance to the Asia-Pacific region and Europe, said James, adding that 85% of the quantity sold outside of the Middle East would go to Asia.

To reduce the shipment time from Saudi Arabia, Sumitomo Chemical had established a distribution hub in Singapore for shipping cargoes within Asia Pacific, and three hubs in Holland, Italy and Belgium respectively for distributing its products in Europe, James said.

Sumitomo Chemical would start offering PetroRabigh’s polyolefins to the market in the fourth quarter, shortly after the new plants came on stream, he added.

“The target is for PetroRabigh to start on-spec and full capacity production within one to two months from start up,” said James, but he declined to say exactly when the plants would come on stream.

PetroRabigh’s downstream capacities will include 700,000 tonnes/year of polypropylene (PP), 350,000 tonnes/year of linear-low density polyethylene  (LLDPE), 300,000 tonnes/year of high density PE (HDPE), and 250,000 tonnes/year of easy processing PE (EPPE). 

The project also includes an 18.4m tonne/year refinery and a cracker that will produce 1.3m tonnes/year of ethylene and 900,000 tonnes/year of propylene.

Chinaplas is an annual plastics and rubber exhibition running from Thursday to Sunday in Shanghai.

Click here to find out more on the European polyethylene margin report. For more on olefins and polyolefins visit ICIS chemical intelligence

By: Chow Bee Lin
+65 6780 4359

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