FocusS Korea Sept petchems exports mostly up on strong China demand

28 October 2009 06:38  [Source: ICIS news]

By Pearl Bantillo

SINGAPORE (ICIS news)--South Korea’s shipments of petrochemicals mostly improved in September, aided by strong demand from China and a slight recovery in global consumption, industry sources said on Wednesday.

Polymethyl methacrhylate (PMMA) led the charge in petrochemical exports, surging 174% year on year as flat screen monitors for television and computers – a key end-user application for the chemical, grew in popularity.

The country nearly tripled the volumes of PMMA it sold abroad in September at 9,706 tonnes, based on statistics from the Korean Industry and Trade Association (KITA).

"Korean companies making flat screen TVs like Samsung have been doing extremely well due to high demand for LCD (liquid crystal display) TVs in countries like China and India, as well as the conversion to the latest technology in flat screen TVs - LED (light emitting diode) - in more sophisticated markets like the US,’’ said a source from one of Asia’s large MMA and PMMA producers.

Demand for PMMA for automotive applications has also been on an uptrend, led by China, where car production and sales have remained buoyant despite the global economic slump, industry sources said.

PMMA is used in manufacturing tail lights for passenger cars.

Among other notable petrochemical commodity export performers was naphtha, which registered a 63.97% jump in September to 301,218 tonnes.

Shipments of butadiene also grew a strong 44% to 18,862 last month, while exports of all the other olefin products declined, based on KITA data.

The third quarter, in particular the month of July, was an exceptionally good month for BD exports, when downstream synthetic rubber producers ramped up operating rates, industry sources said.

Exports of aromatics such as toluene, paraxylene, mixed xylene and orthoxylene also grew last month, with the exception of benzene, according to official statistics. (Please see table below)

The slump in the South Korea’s exports has started to ease, helping the economy post its strongest growth in seven-and-a-half years in the third quarter.

 “There was recovery momentum not only led by private consumption but also by net exports. Investment sentiments were also contributing to the growth pick up,” said Vishnu Viswarathan, Singapore-based economist at research firm Forecast.

Overall exports fell at its slowest pace in 11 months in September, slipping 7.9% year on year to $35.15bn, based on data from the Bank of Korea.

“Exports growth has been partly filled by China’s demand as well as regional demand. There was a broad-based pick-up due to the [Korean] won’s competitive edge over the [Japanese] yen in terms of electronics and automotive exports,” he added.

The won’s depreciation helped make South Korean exports more attractive while Japanese exporters could not boost sales due to the strong yen.

South Korea, Asia's fourth largest economy, grew 2.9% in the third quarter from the second as domestic demand and exports gathered momentum on the back of the government’s heavy fiscal spending.

“Domestic demand for pipe grade high density polyethylene (HDPE) has been quite strong in South Korea due to improved performance in the infrastructure and construction sectors,” said a South Korean trader.

Korean pipe grade HDPE producers were expected to debottleneck their plants next year to cope with increased demand in the local market, he added.

Exports of the same product, meanwhile, rose 9% in September to 104,744 tonnes, based on official trade statistics. But shipments could fall in the coming months as producers cut their output for this grade, given continued weak demand.

“We have reduced our exports of this grade in the fourth quarter due to lacklustre demand in export markets, especially India and Turkey,” a South Korean supplier said.

Some polymer players, meanwhile, were grappling with higher costs due to rising crude prices, which hit a one-year high above $81/bbl last week.

“We think the fourth quarter [exports] may not be as good because our costs are going up due to soaring crude prices,” said a source at Honam Petrochemical, refering to petrochemicals in general.

South Korea has seen sustained improvement in its economy over the past three quarters and may continue to get better in the coming months, said Forecast’s Viswarathan.

“As we get into the fourth quarter and the early part of 2010, inventory moves will be positive for growth,” he said, citing the huge inventory correction that occurred since demand slumped late last year.

“But at the end of the day, it depends on end demand - on how much confidence manufacturers have to [boost] their holdings,” said Viswarathan.

While there are irrefutable signs that global economic recovery is underway, uncertainties persist on how strong and how fast can the economies emerge from the worst recession to hit in decades.

PRODUCT	Sept '09	Sept '08	Difference	% change YoY	Aug '09	MoM difference	% change MoM
	(tonnes)	(tonnes)	(tonnes)		(tonnes)	(tonnes)
Naphtha	301,218	183,699	117,519	63.97	293,734	7,484	2.55
Ethylene	52,000	70,834	18,834	26.59	50,974	1,026	2.01
Benzene	111,368	115,833	4,465	3.85	99,166	12,202	12.30
Polypropylene	71,494	81,944	10,450	12.75	45,196	26,298	58.19
Polyethylene	104,744	96,176	8,568	8.91	100,198	4,546	4.54
LLDPE	46,339	36,658	9,681	26.41	46,032	307	0.67
LDPE	16,656	12,659	3,997	31.57	19,629	2,973	15.15
HDPE	104,744	96,176	8,568	8.91	100,198	4,546	4.54
Toluene	48,810	38,488	10,322	26.82	67,555	18,745	27.75
Propylene	54,891	72,186	17,295	23.96	45,196	9,695	21.45
Butadiene Rubber	16,357	13,017	3,340	25.66	22,185	5,828	26.27
Butadiene (buta, 1,3, diene and isoprene)	18,862	13,100	5,762	43.98	19,413	551	2.84
Styrene	111,915	99,848	12,067	12.09	105,009	6,906	6.58
Paraxylene	104,507	99,453	5,054	5.08	102,894	1,613	1.57
PET	93,773	77,828	15,945	20.49	61,683	32,090	52.02
Mixed Xylene	35,073	31,881	3,192	10.01	39,486	4,413	11.18
PTA	320,736	324,479	3,743	1.15	303,057	17,679	5.83
MMA	1,042	996	46	4.62	1,176	134	11.39
PMMA	9,706	3,536	6,170	174.49	9,207	499	5.42
Orthoxylene	4,949	6,002	1,053	17.54	9,792	4,843	49.46
Polyurethane	3,482	2,487	995	40.01	2,499	983	39.34
EPS	9,002	10,187	1,185	11.63	8,989	13	0.14
Acrylonitrile	10,763	9,087	1,676	18.44	11,860	1,097	9.25
Polycarbonate	27,735	16,888	10,847	64.23	28,756	1,021	3.55
Ethyl Acetate	308	936	628	67.09	1,987	1,679	84.50
Vinyl Acetate Monomer	5,595	3,092	2,503	80.95	4,653	942	20.25
PVC	43,401	48,848	5,447	11.15	41,473	1,928	4.65
PVC	189	313	124	39.62	152	37	24.34
PVC	1,451	1,379	72	5.22	671	780	116.24
PVC	14	41	27	65.85	22	8	36.36

Source: KITA

With additional reporting by Prema Viswanathan, Helen Yan, Chow Bee Lin, Anu Agarwal

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By: Pearl Bantillo
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