APIC '08: NE Asia PVC margins hit by demand

28 May 2008 03:33  [Source: ICIS news]

SINGAPORE (ICIS news)--Northeast Asian polyvinyl chloride (PVC) producers are facing a double threat from margins pressure and low demand growth, producers said late on Tuesday.

"A major factor is the migration of converters, especially the smaller ones, from high-cost locations such as Taiwan, Japan and South Korea, to low-cost locations such as China and Vietnam," a producer said on the sidelines of the Asia Petrochemical Industry Conference (APIC) in Singapore.

South Korean demand for PVC is expected to grow only 2-3% in 2008, a second producer said.

In Japan, demand is expected to be flat this year, after declining 5% in 2007, due to a slump in the construction segment, a third producer said.

"Margins have also come under pressure due to rocketing naphtha and crude values. With naphtha surging above $1,000/tonne CFR [cost and freight] Japan, it is becoming increasingly difficult to manage our costs," said the first producer.

Low demand growth in the domestic markets has compelled NE Asian producers to step up their exports, especially to destinations with burgeoning consumption, such as India, Turkey and the Middle East.

Production of PVC in South Korea is estimated at around 1.4m tonnes/year in 2008, while demand is estimated at around 918,000 tonnes/year.

Taiwanese PVC production, at 1.4m tonnes/year, also outstrips demand at 706,000 tonnes/year.

Japan's PVC demand is at 1.36m tonnes/year, short of its estimated production at 1.9m tonnes/year.

Ng Hun Wei contributed to this article
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ICIS and The Chemical Daily have produced an official, 84-page special publication on Asian petrochemicals for the APIC event

By: Prema Viswanathan
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