FocusJapan may increase PE, PP exports in Q4 – industry sources

08 September 2009 10:31  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--Japan may increase exports of polyethylene (PE) and polypropylene (PP) in the fourth quarter given that recovery in domestic demand has been lagging behind that of other Asian markets, industry sources said on Tuesday.

“July sales almost doubled especially for PP, PE, polyvinyl chloride (PVC) and styrene monomer against July last year, so we think many Japanese suppliers will prepare much export quantity for a few more months,” a source at Mitsui & Co said.

“We have been getting more PE from Japanese producers for export, mainly film, yarn and blow moulding grades of high density PE (HDPE). The export volume in the October-December quarter may not be as much as that in February and March this year, but it should be more than in the July-September quarter,” a source at Marubeni said.

In the first half of the year, Japan exported around 177,700 tonnes of low and linear low density PE, up 62% from the same period a year earlier, according to the Japan Petrochemical Industry Association (JPIA).

Its HDPE exports soared 131% at 125,200 tonnes, while its PP exports jumped 40% to 174,800 tonnes, based on the same data.

Japan’s LDPE exports, meanwhile, might not increase significantly due to production cuts caused by weak domestic demand, local producers and traders said.

“Our LDPE/ethylene vinyl acetate (EVA) plants have been focusing on EVA production to meet domestic demand, so our LDPE output has already been reduced, and hence we don’t have extra LDPE for export,” the major LDPE producer said.

“LDPE supply in Japan is rather tight,” said a source at Mitsui & Co, echoing expectations of limited LDPE exports out of Japan in the months ahead.

Japan would export more only if it came under inventory pressure as its focus was still on the domestic market, local traders said.

Japan’s PE and PP inventories are currently estimated at around two months of its monthly production, which is not considered high,” the Marubeni source said.

The inventories would be considered too high when they hit three to four months of production, he added.

Japan was holding 312,600 tonnes of LDPE and LLDPE, 153,100 tonnes of HDPE and 497,000 tonnes of PP as of end July this year, based on JPIA’s data.

The data also showed the country produced 117,600 tonnes of LDPE and LLDPE and 198,800 tonnes of PP in the same month.

Its inventories hit the year’s peak levels in January with 472,000 tonnes of LDPE and LLDPE, 264,000 tonnes of HDPE and 734,000 tonnes of PP, latest data from JPIA showed.

One local PE producer said it believed Japan would export more only if exports could fetch a higher margin, which in turn would be determined by the value of the Japanese yen against the US dollar, and the value of feedstock naphtha.

“If the yen and naphtha price strengthen further, I think Japan's PE exports will not increase in the October-December quarter,” the PE producer said.

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By: Chow Bee Lin
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