APIC '09: Asia petchem leaders to tackle industry challenges

13 May 2009 06:08  [Source: ICIS news]

By Bohan Loh

SINGAPORE (ICIS news)--How the Asian petrochemical companies will survive the worst ever economic downturn in decades will be a key theme when business leaders meet in Seoul on Thursday for the region’s largest conference on the industry.

The two-day 9th Asia Petrochemical Industry Conference (APIC ’09) in South Korea would be a major platform for dialogues on the key challenges facing the industry amid the pervading doom and gloom on the global economy.

The dynamics of the sector has been vastly altered in the past one year, said a Singapore-based producer of basic chemicals.

“The same time one year ago, you could have all the money but didn’t know where you could buy the cargoes you needed. Now, it’s the direct opposite situation,” he told ICIS news, citing low supplies and falling demand.

The economic downturn had severely hit the profitability of petrochemical companies, with tougher times looming ahead.

The industry may see a prolonged trough with new capacities being added when demand is at a low point. Petrochemical facility start-ups in the Middle East and China throughout the year would add an estimated 10.4m tonnes of ethylene capacity in the two regions and could keep a downward pressure on product prices, according to data from global chemical intelligence service ICIS pricing.

Business advisory firm KPMG International has projected ethylene capacities in the Middle East to increase to 33m tonnes/year by 2012 and for the combined polyethylene and polypropylene capacities in the region to rise to 30m tonnes/year.

To make matters worse, the threat of a pandemic with the emergence of the H1N1 flu virus could derail the global economy's path to recovery.

Thirty countries, including APIC host country South Korea, have confirmed cases of the new strain of the flu virus, according to the World Health Organization.

Concerns about contracting the virus had decimated the number of participants at APIC ’09.

Event organiser Korea Petrochemical Industry Association said registrations for the conference currently stands in the low 800s compared to more than 1,200 delegates that attended the previous year's meeting.

It said the actual attendance of the event could be even lower as its “no cancellation refund policy” did not require registered delegates to inform the association of the cancellation.

Marubeni Chemix Corp, for example, will just send out 22 delegates to the conference instead of the original 38, said a company manager at its organic chemicals department.

“I know of some traders who have had meetings dwindle down to four from the high 10s, and who eventually decided to cancel attending altogether,” said a Singapore-based solvents trader. He has also decided not to attend.

Several other companies had also previously told ICIS news they had already cancelled travel plans to Seoul.

But the likely low turnout at the conference from last year does not take away the significance of the annual gathering, where the entire spectrum of the regional petrochemical industry would be represented, analysts said.

"Some talks or strategies discussed in the conference will have a long term impact on the petrochemical industry,” said Wang Xixin, an analyst from Wuxi-based Guolian Securities.

APIC’09 titled "Embracing Change; Opportunity at a time of Market Uncertainty" will run from 14 -15 May.

With additional reporting by Helen Lee and Judith Wang

To discuss issues facing the chemical industry go to ICIS connect

By: Bohan Loh
+65 6780 4359

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