14 May 2010 06:40 [Source: ICIS news]
By John Richardson
MUMBAI (ICIS news)--Polyolefin pricing will escape a feared drawn-out margin-squeeze that could have followed new capacities coming on stream, because plant start-ups have been delayed and Asian demand has been exceptionally rapid, industry sources said on Friday.
"I had said several years ago that 2009–10 would be alright in terms of a supply-side shock, and I am being proved right,” said one senior executive with an Asian producer on the sidelines of the 2010 Asia Petrochemical Industry Conference (APIC) in Mumbai. The event takes place on 13–14 May.
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“The delays have now been so long and so protracted, during which time Asian demand has grown exceptionally rapidly to help the new capacity has started up, that I believe that the bigger downside risk is demand,” the executive said.
“Sure, if the Greek government debt crisis or some or other big and prolonged macro event was to set to the global recovery back then we could be facing severe problems,” he added.
“But the good news is that western producers are likely to make further deep operating-rate cuts in the event of a demand-side crisis. The cuts they have already made are another reason why markets remain healthy right now.”
A European-based polyethylene (PE) industry source agreed, and said: “Asian demand-growth has been amazing. I really believe the next two decades will be all about
“On scrutiny, much of the 2009 growth was due to replenishment of stocks after massive de-stocking at the end of 2008 and also reduced use of recycled material by converters,” said Mazlan Razak, Kuala Lumpur-based consultant with DeWitt & Co.
But growth remains strong so far this year and is likely be above 10% for the whole of 2010, estimated several sources.
PP will grow by 12%, reaching apparent demand of 2.462m tonnes, the CPMA adds.
Overall PE growth was 7.6% in 2009 but is expected to accelerate to 10.5% this the year, the CPMA continued. This would leave
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