FocusHigh prices to keep S Korea petchem exports growing to end-'11

26 September 2011 07:31  [Source: ICIS news]

High prices to keep S Korea petchem exports growing to end-By Nurluqman Suratman

SINGAPORE (ICIS)--Higher prices allowed South Korea’s petrochemical exports in August to increase 36.5% year on year to $5.32bn (€3.94bn), bolstering hopes that the value of monthly shipments will remain strong through end-2011 despite a weakening of global demand, analysts said on Monday.

The US, the world’s biggest economy, is in a fragile state, while the eurozone is deep in its debt troubles. Meanwhile, China - South Korea’s main export market for petrochemicals – is beset with its own problems of reining in inflation, creating a credit crunch within the country.

Against the gloomy global economic backdrop, demand prospects for South Korea’s exports do no look very promising.

“Macro-economic data from August 2011 indicated a slowdown in US GDP growth and consumer spending, while China’s GDP growth is also expected to slow in coming years. These developments could adversely affect the [South Korea’s] trade balance,” said Ashwin Matabadal, an economist at Rabobank Nederland’s economic research department.

South Korea’s overall exports to the US in August fell by 5.9% in the first 20 days in August while total shipments to China rose by 16.5%, according to the country's Ministry Knowledge Economy (MKE).

Meanwhile, export volumes of most of South Korea's major petrochemical products grew on a year-on-year basis in August, according to data from Korea International Trade Association (KITA) showed. (Please see table below)

Overseas shipments of ethylene surged 76% year on year to 86,187 tonnes in August, while exports of propylene surged by 89.9% to 84,140 tonnes, the data showed.

Exports of polypropylene (PP) grew by 46.6% to 93,698 tonnes, while overseas shipments of polyethylene fell by 5.28% to 101,190 tonnes, according to KITA.

Among other aromatics products, shipments of benzene rose 8.54% year on year to 112,487 tonnes, while exports of paraxylene (PX) were up by 40.1% to 173,777 tonnes, KITA data showed.

Shipments of methyl methacrylate (MMA), on the other hand, slumped by 53.9% year on year to 569 tonnes in August, while shipments of polymethyl methacrylate (PMMA) fell by 15.3% to 7,612 tonnes, the data showed.

For the first 20 days in August, South Korea’s exports of petroleum products surged by 84.5% to $5.07bn, according to data from the MKE.

Overseas shipments of textiles fell by 15.7% to $1.22bn over the same period, while exports of automobiles rose by 32.5% to $3.23bn, the data showed.

For the whole month of August, South Korea’s overall exports increased 27.1% year on year to $46.4bn, with total imports up 29.2% year on year to $45.6bn, resulting in a trade surplus of $800m, according to the MKE.

While overall trade have been robust this year, risks are to the downside, said Rabobank’s Matabadal.

But higher prices can mask a decline in volumes of shipments.

“Spot prices of petrochemical products are much higher now than last year, and this is pushing up export values. We see US dollar-based exports increasing in the fourth quarter on a year-on-year basis,” said Hong Chanyang, a petrochemicals industry analyst at Seoul-based Shinhan Investment Corp.

Prices of petrochemical products usually track the movement of crude prices in the international market, analysts said.

“Sales of petrochemical and petroleum products, especially those sold on a US dollar basis are sensitive to crude prices,” Hong said, adding that buoyant global oil futures will continue drive petrochemical product prices higher in the medium-term.

EXPORTS (in tonnes)





PRODUCT

August  '11

August '10

YoY

Difference

% Change YoY

Naphtha

314,630

362,404

-47,774

-13.18

Ethylene

86,187

48,944

37,243

76.09

Benzene

112,487

103,639

8,848

8.54

Polypropylene

93,698

63,925

29,773

46.57

Polyethylene

101,190

106,826

-5,636

-5.28

LLDPE

49,417

52,459

-3,042

-5.80

LDPE

30,199

23,258

6,941

29.84

HDPE

101,190

106,826

-5,636

-5.28

Toluene

78,309

61,978

16,331

26.35

Propylene

84,140

44,318

39,822

89.86

Butadiene Rubber

25,209

21,838

3,371

15.44

Buta-1,3-diene and isoprene

14,832

19,038

-4,206

-22.09

Styrene

127,201

117,953

9,248

7.84

Paraxylene

173,777

124,061

49,716

40.07

PET

71,657

78,685

-7,028

-8.93

Mixed Xylene Isomers

37,624

43,066

-5,442

-12.64

PTA

307,670

292,886

14,784

5.05

MMA

569

1,235

-666

-53.93

PMMA

7,612

8,982

-1,370

-15.25

Orthoxylene

7,752

17,451

-9,699

-55.58

Expansible polystyrene

14,087

13,625

462

3.39

Acrylonitrile

18,847

13,810

5,037

36.47

Polycarbonate

34,986

29,317

5,669

19.34

Ethyl Acetate

580

1,729

-1,149

-66.45

Vinyl Acetate Monomer

7,857

6,844

1,013

14.80

Paraffin Wax (slack wax and scale wax)

527

707

-180

-25.46

P-wax with less than 0.75%

105

78

27

34.62

PVC (not mixed with other substances)

56,341

45,029

11,312

25.12

PVC (non-plasticised)

69

130

-61

-46.92

PVC (plasticised)

1,706

1,890

-184

-9.74

PVC (In aqueous dispersion)

15

25

-10

-40.00

Source: KITA

($1 = €0.74)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Nurluqman Suratman



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