South Korea’s LG Chem hikes H2 July offers on feedstock costs

03 July 2014 03:28 Source:ICIS News

SINGAPORE (ICIS)--South Korea’s LG Chem has hiked its offers for second-half July 2-ethylhexanol (2-EH) cargoes, citing rising feedstock costs and the appreciation in the South Korean won as key reasons, a company source said late on Wednesday.

Offers from the company are raised from $1,420/tonne FOB (free on board) Korea to $1,470/tonne FOB Korea for second-half July shipments starting 1 July, the source added.

“We are fully aware that this may cause [decreased] sales volume, but [we] will stand firm with our price decision,” the source said.

Both naphtha and propylene feedstock costs have been rising, placing upward pressure on offers for 2-EH, the source added.

The company has been targeting other key markets in the region and the US because of the lower netbacks and unworkable buying indications from China-based buyers since the early part of 2014, the source said.

Some market participants said it remains unclear whether buyers will be accepting this price increase, given the poor downstream demand. A deal had been concluded at $1,410/tonne FOB Korea in the week, which is still a $60/tonne price gap from LG Chem’s offers, they added.

The company has a 144,000 tonne/year 2-EH plant in Yeosu, as well as an n-butanol (NBA)/2-EH swing plant in Naju that can produce 100,000 tonnes/year of 2-EH, both of which are operating at 100%, according to the company source.

2-EH is primarily used in the production of dioctyl phthalate (DOP).                     

By Trixie Yap