KOREA STRIKE: Polymer ops could be cut

13 June 2008 05:58  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--South Korea’s polypropylene and polyethylene (PP and PE) makers may have to start cutting production rates as early as next week if the country-wide transport strike is not resolved by then, company sources said on Friday.

Polymirae which runs a 630,000 tonne/year PP plant in Yeosu may cut its operating rate by 10-20% capacity next week due to the strike, a company source said.

“Our plants are running at full capacity now but we are unable to deliver cargoes to the port for export, so we may have to cut operating rate next week if the transport strike drags on,” the source said.

The company’s production plans also depends on whether they could find additional storage space for their containers. “We are looking for more open space at our plant site to store our containers until they can be moved to the ports,” he said.

Two major PP and PE producers - Korea Petrochemical Industrial Co (KPIC) and Honam Petrochemical - might run into storage problems if the strike ran on for two weeks, and might have to reduce output as a result, company sources said.

KPIC runs a 360,000 tonne/year PP plant and a 450,000 tonne/year PE line at Ulsan, and Honam’s plants in Yeosu and Daesan have a combined capacity of 930,000 tonnes/year of PP and 830,000 tonnes/year of PE.

LG Chemical which has 280,000 tonnes/year of PP capacity and 830,000 tonnes/year of PE capacity in Yeosu and Daesan might have to cut production if it could not start moving its cargoes out of the plants in 10 days, a company source said.

Daelim Industrial which operates a 400,000 tonne/year PE facility in Yeosu had to start moving its cargoes out in one week’s time if it were to keep running its plants at full capacity, company sources said.

Hanwha, which runs PE facilities in Ulsan and Yeosu with a combined capacity of more than 700,000 tonnes/year, is unlikely to cut production even if the strike runs beyond two weeks, as it resumed normal production only recently after scheduled plant turnarounds in May, a company source said.

However, Hanwha’s exports might be affected as due to its plant shutdown as it was unable to move a lot of material ahead of the strike to the ports, the source said. He added that its counter measures were thwarted as some truck drivers had stopped working in early June.

Samsung Total, which runs a 870,000 tonne/year PP plant and a PE facility with a capacity of around 400,000 tonnes/year in Daesan, had no plans to cut production yet, a company source said.

Three other polyolefins producers, namely GS Caltex, SK Energy and Hyosung could not be reached for comment.

The strike by truckers for better wages and lower diesel prices started early this week in Daesan and spread to Yeosu and Ulsan – has engulfed the whole country. By halting the movement of goods over roads, it threatens to paralyse South Korea’s economy.

To discuss issues facing the chemical industry go to ICIS connect

By: Chow Bee Lin
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly