FocusKorea PET could enjoy price gains on strike

17 June 2008 03:51  [Source: ICIS news]

By Hong Chou Hui 

SINGAPORE (ICIS news)--Korean sellers of polyethylene terephthalate (PET) bottle chips could enjoy price gains of up to $90/tonne (€58.50/tonne) for their exports on transport woes as a result of truck drivers going on strike last week, producers and traders said on Tuesday.

“We’re actually hoping that our customers will cancel their orders so that we can take them back and sell them at our target price of $1,600/tonne free on board (FOB) Korea for the rest of June,” an executive from the country's largest maker of PET bottle chips, KP Chemicals, said.

He added that the PET bottle chips due to be shipped last week were sold between $1,430-1,460/tonne in May.

Prices for PET bottle chips from Korea firmed by $30/tonne to $1,480-1,510/tonne for the week to 13 June from the previous week’s level of $1,450-1,480/tonne on the back of deals done, based on global chemical markets intelligence service ICIS pricing.

“The customers know that if they don’t want our chips, they will end up having to order from other suppliers but they will only stand to lose money since no one is selling below $1,500/tonne FOB Asia now. That’s why they’d rather just grit their teeth and put up with the delay,” said the KP Chemicals executive.

KP Chemicals’ PET exports are shipped out of the port of Busan in southern Korea.

Another major Korean PET bottle chip maker, SK Chemicals, stood to benefit from the country’s transport woes, said market sources.

“The European market has pretty much been cornered by KP and SK Chemicals. If KP can’t move its cargoes to Europe, then SK can step into the breach because it has a PET factory in Poland,” said a northeast Asian trader of PET fibre and bottle chips.

A source from SK Chemicals could not confirm the presence of such a PET plant in Poland but admitted that it would be able “to meet additional requirements” from buyers in Europe.

Sales to Europe in April and May enabled Korean PET makers to enjoy larger margins over other Asian sellers on the back of the euro’s appreciation against the dollar, added the same executive from KP Chemicals.

The strike by around 15,000 truckers for better wages and lower diesel prices – which started early last 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

Noting that the economy was not doing well, President Lee Myung Bak said companies and the union should make concessions to resolve the issue as early as possible, local media reported.

Major PET producers in Asia include Far Eastern Textile, Reliance and Nanya.

($1 = €0.65)

By: Hong Chou Hui
+65 6780 4359

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