FocusS Korea's PE/PP producers eye Latin American markets

16 March 2010 07:40  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--Polyethylene (PE) and polypropylene (PP) producers in South Korea are looking to make further inroads into the South American markets where sales can yield bigger margins compared to their traditional market in China, industry sources said on Tuesday.

Tight PE supply in South America had enabled South Korea to sell more to that region, with exports consisting mainly of film grade high density PE (HDPE) and linear low density PE (LLDPE), Korean producers said.

Film grade HDPE and LLDPE could be sold at $1,400-1,410/tonne (€1,022-1,029/tonne) FOB (free on board) South Korea for shipment to South America, with freight estimated at $110-120/tonne, said a Korean PE producer.

But the same cargo could only fetch prices below $1,400/tonne FOB Korea in the Chinese market, he said.

A Korean PP producer said he could achieve FOB Korea values in the low-$1,400/tonne levels for exporting block copolymer PP to South America, while it would have been difficult to find buyers in China at similar prices.

South American buyers had been seeking block copolymer PP from alternative sources such as South Korea, as supply from their traditional US sources had fallen due to tight supply and higher prices of US material, the Korean PP producer added.

Homopolymer PP was assessed on an FOB US Gulf basis at 70-72 US CTS/LB for the week ended 12 March, equivalent to around $1,540-1,584/tonne FOB US Gulf, according to global chemical market intelligence service ICIS pricing.

Despite their increased export to South America, most Korean producers said their main export market was still China - the world’s largest PE and PP importer.

South Korea was one of the top ten PE and PP exporters to China last year, having shipped out a total of 1.3m tonnes of PE and 1.1m tonnes of PP to that market.

Major PE and PP producers in South Korea include LG Chem, SK Energy, Hanwha Chemical and Honam Petrochemical.

($1 = €0.73)

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By: Chow Bee Lin
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