1.5m tonnes Of New Asian PE Supply In 2013



By John Richardson

SOME 1.5m tonnes of new polyethylene (PE) supply will arrive in the Asian market during 2013 at a time of very uncertain and fragile demand, a source with a global producer has told the blog.

A large amount of new polypropylene (PP) supply is also expected to enter the market.

“Even if there is a moderate recovery in demand, the challenge will be for the market to absorb all of this capacity,” said the source.

“It is quite likely we will see continued downward pressure on pricing unless there is significant restocking in China, which I worry will not happen, and there are a substantial number of technical problems with start-ups.”

As the blog reported earlier this week, and last month, sentiment has improved in China. Traders appear to have made good money, with at least one producer reporting strong Q4 2012 sales.

But much of the recovery is due to temporary short supply that will ease significantly when the current Middle East turnaround season comes to an end.

And, in addition to the new capacities we listed earlier this week, here are some more PP plants scheduled to start-up in 2013, based on our ICIS Plants & Projects data base (We will provide more information as events develop):

* Coal Shaanxi Yulin Energy & Chemical at Shannxi in China – 300,000 tonnes/year.

* Pucheng Clean Energy Company Pucheng at Weinan in Shaanxi – 400,000 tonnes/year.

*Guangzhou Petrochemical General Works, Guangzhou, Guangdong – 200,000 tonnes/year.

New supply of both PE and PP is expected to start disrupting the market from Q2.

It wasn’t supposed to be like this. Demand was supposed to strong-enough to absorb all the new capacities as he headed towards the next peak in petrochemicals demand and margins.

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