APIC ’08:Siam Mitsui explores wider PTA markets

26 May 2008 09:04  [Source: ICIS news]

By Serene Cheong

SINGAPORE (ICIS news)--Thai purified terephthalic acid (PTA) producer Siam Mitsui will shift its export focus from China to eastern Europe and the Middle East on "bad economics and strong domestic competition" in the northeast Asian country, a company executive said on Monday.

Demand in Europe and the Middle East would remain strong for the next two and five years respectively due to unstable and low domestic supplies, added Siam Mitsui sales manager Somjane Sooksripanich, who is in Singapore for the Asia Petrochemical Industry Conference.

Siam Mitsui currently exports 55-60% of 1.5m tonne/year PTA output from its Mab Ta Phut plant.

The Middle East, as well as Pakistan, are seen as the most promising markets for Siam Mitsui as the "region is a net PTA importer", Somjane said. "They will continue to be short of PTA as there are currently no new expansion plans in the region."

The European market would also remain very lucrative until the second half of 2010 or early 2011 on tight supplies, he added.

"Our core customers in Europe have tried to secure more PTA volume with us, but we are currently still in discussion and have not settled [any contracts]," he said, adding that exports to Europe would be not be viable after 2011 when there would be an increase in domestic capacities from the start-up of regional facilities.

PTA production in Europe is currently affected by a spate of shutdowns and two cases of force majeure at major producers BP and Interquisa.

BP, Europe’s largest PTA producer, in mid-April announced force majeure at its 1m tonne/year facility in Geel, Belgium due to industrial action by the plant’s workforce.

The continent’s second largest maker, Spain’s Interquisa, also declared force majeure due to technical problems at its 750,000 tonne/year plant in San Roque beginning in early May.

While there was no clear indication of when BP’s facility would resume operations, the Interquisa unit was expected to take at least two months to come back on-stream amid the seasonal demand for PET in Europe.

Siam Mitsui's decision to diversify to non-Chinese markets was backed by weak Chinese demand due to an expected 3m tonnes/year increase in domestic capacity by the end of 2009 from a number of planned start-ups, Somjane said.

Bearish downstream polyester trends were also evident at the China Import and Export Fair in April 2008, a barometer of China export orders.

At the event, officials reported a 25% drop in export figures for polyester products to $2.27bn (€1.43bn) from $3.02bn in the six-month period from October 2007 to April 2008.

Additionally, high crude values and a $100/tonne hike in upstream paraxylene (PX) prices from May’s settled contracts at $1,290/tonne cost and freight (CFR) Asia to around $1,390-1,400/tonne for June could further squeeze PTA margins.

This may force producers such as Siam Mitsui to reduce its plant utilisation rates or even partially shut its 1.5m tonne/year facilities in Mab Ta Phut to reduce operation losses, said Somjane.

Siam Mistui is a joint venture of Japan’s Mitsui Chemicals and Thai conglomerate Siam Cement.

Major PTA producers in Asia include BP, Formosa Chemical and Fibre Corp (FCFC) and Mitsubishi Chemicals.

PTA is used to make polyester fibres and yarns and polyethylene terephthalate (PET) chips.

The two-day APIC meeting will begin on Tuesday.

($1 = €0.63)

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By: Serene Cheong
+65 6780 4359

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