High stocks boost S Korea Oct petchem exports

28 November 2008 07:05  [Source: ICIS news]

High stocks boost S Korea Oct petchem exportsBy Pearl Bantillo


SINGAPORE (ICIS news)--South Korea’s petrochemical exports in October moved significantly higher as producers cleared inventory in the face of the falling won and weak domestic demand, market sources said on Friday.


October shipments of propylene, benzene and purified terephthalic acid (PTA) posted strong double-digit growth in terms of volume, from year-ago levels, based on latest data from the Korea International Trade Association.


A slump in South Korea’s domestic economy was forcing companies with high inventories to market their products abroad, particularly China, while the weaker won made Korean exports more competitive, industry players said.


The won was the worst-performing currency in Asia, battered because of the country’s dependence on imported crude, which was on a steep climb this year until recent months, along with the swift erosion of the country’s macroeconomic fundamentals.


Propylene exports surged 55% in October to 76,528 tonnes, aided by slowing C3 domestic demand.


There is a surplus of the product in the market available for exports as downstream polypropylene (PP) makers such as PolyMirae and an acrylonitrile producer at Taekwang have slashed output. 


Benzene exports were unusually large, totalling 111,577 tonnes in October, with shipments to the US exceeding the average monthly export volumes at 57,453 tonnes.


The strong export volumes can be viewed as sign of times as South Korean producers look for ways to unload inventories, even at a loss, some market sources said.


Some petrochemical exports declined due to a slump in regional manufacturing activities.


Polymethyl methacrylate (PMMA) shipments fell 43% to 3,800 tonnes, with notable weakness in demand coming from China, a major market that uses the chemical for the automotive and houseware sectors.  


“November figures may be even lower as by 25 November only slightly more than 1,000 tonnes had been exported,” said a PMMA producer in Korea.


Exports of styrene monomer (SM) dipped 6% to 117,961 tonnes also as a result of weaker demand from China.


Weaker domestic consumption in South Korea saw SM imports falling a hefty 55% in October as plants producing resins like polystyrene (PS) and acrylonotrile-butadiene-styrene have lowered their operating rates.


The Chinese government recently announced a yuan (CNY) 4,000bn ($586bn) pump-priming package to prevent its economy from slowing further due to strains in the export-oriented manufacturing sector.


However, some market observers believe the effects of this economic stimulus package would only trickle down to the manufacturing sector by the middle of 2009.


Traders attributed the low production rate of resins to waning demand in China as the manufacturing sector was hard hit by the global financial crisis which had severely eroded demand for China made goods.


Korean polyolefins exports fell 13-14% in October as many producers such as Honam Petrochemical and SK Energy cut output on weak demand resulting from the global downturn.


($1 = CNY6.83/W1,475)


Clive Ong, Chow Bee Lin, Anu Agarwal and Steve Tan contributed to this story

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By: Pearl Bantillo
+65 6780 4359

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