SK Energy plans to build MLLDPE plant outside Asia

18 May 2011 11:17  [Source: ICIS news]

GUANGZHOU (ICIS)--South Korea’s SK Energy plans to build a metallocene linear low density polyethylene (MLLDPE) plant outside of Asia, after its new plant in South Korea goes into commercial production, a company source said on Wednesday.

“The proposed MLLDPE plant outside of Asia will be located either in the Middle East or South America,” the source said on the sidelines of the four-day ChinaPlas exhibition in Guangzhou.

SK Energy is due to start construction of a new C8 MLLDPE/elastomer swing plant in Ulsan, South Korea, in July. The plant is scheduled for start up by 2013, said the source.

The swing plant in South Korea will have the capacity to produce 230,000 tonne/year of C8 MLLDPE or 150,000-200,000 tonnes/year of elastomers, the source said.

Several factors would be considered in its proposed MLLDPE investment outside Asia, including demand and feedstock availability, he said.

The plant would cater to the European market, if it is located in the Middle East, but it would be better positioned to make inroads into the US markets, if it is in South America, the SK Energy source said.

The company sees Europe and the US as promising markets, where end-users - frustrated by high price premiums charged by existing global suppliers - welcome the entry of new suppliers, he said.

“The existing MLLDPE suppliers can command very high premiums because there are only a handful of suppliers in the world now,” the source said.

The high price premiums of MLLDPE in Europe and the US would enable SK Energy to compete in those markets, despite the high cost of shipping the material from South Korea, he said.

Freight from South Korea to Europe was estimated at $100/tonne (€70/tonne) and shipment to the US would cost less, the source said.

SK Energy has identified potential partners for marketing and distributing its product in the US, and it was open to shipping its material in bulk to cater to the US market, he said. The producer currently ships its resins in 25kg bags.

If SK Energy’s proposed plant is to be built in South America, it is likely to be in Peru or Colombia, where SK Energy already has ongoing upstream projects that could provide feedstock to the proposed MLLDPE plant, he added.

ChinaPlas, the largest plastics event in Asia, runs through 20 May.

($1 = €0.70)

By: Chow Bee Lin
+65 6780 4359

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