China PE prices to bottom out in mid Feb on restocking

(ICIS) -- China's polyethylene (PE) prices are expected to bottom out in mid-February on restocking activity following a persistent downtrend, industry sources said on Tuesday.

The prices of different PE grades fell by 2.7-7.5% in the past six weeks on weak demand, according to ICIS.
Restocking demand will be significant because most importers have been keeping low inventory in 2011 as a result of tight credit and weak downstream demand, and some have reduced their December stocks to minimum levels ahead of the Lunar New Year holiday on 22-28 January, local traders said.
PE prices will not fall further in the first quarter because the current prices of the different PE grades are already close to or at cost for naphtha-based PE producers, according to some local traders.
More naphtha-based PE plants will reduce production rates in the first quarter if their margins fall further, they said.

The cash margin of integrated naphtha-based producers was estimated at USD 147/tonne (EUR 113/tonne) for the week ended 16 December, according to ICIS.
A number of PE producers in Taiwan and South Korea have been running their PE plants at reduced rates because of thin margins.

⌠The Chinese economy will be at the tail-end of a down-cycle in 2012. It's expected to improve only in 2013, a Beijing-based trader said in Mandarin.
China's monetary policy is expected to remain tight next year which will in turn curtail the domestic plastics demand, local traders said.


MRC

China Petchem Companies may suffer from possible decrease of exports to Europe in 2012

(chemmonitor ) -- Chinese companies may suffer great losses in the following year due to a possible considerable drop in petrochemical deliveries to Europe, Chinese key export market.

A certain exports decrease is currently observed. It came as a result of the continuing debt crisis in the European region.

About 45 percent of polymers obtained by Chinese purchasers annually is converted into other products and forwarded to global end-users, mostly Europe-based ones.



MRC

Asia BD may surpass USD3,000/tonne in January

(ICIS) -- Butadiene (BD) prices in Asia may rise above USD 3,000/tonne (EUR 2,310/tonne) in January as traders snap up dwindling stocks ahead of the Lunar New Year, traders and producers said.

Spot offers for January shipments have increased to USD 3,100/tonne FOB (free on board) Korea amid market talk that some Japanese traders have bought cargoes at around this price level.
With intra-regional freight costs at USD 60-80/tonne, this would mean that January shipments would cost USD 3,160-3,180/tonne CFR (cost & freight) northeast (NE) Asia.

In the week ended 23 December, spot prices were at USD 2,800-2,850/tonne CFR NE Asia, according to ICIS.
BD prices in Asia have rebounded sharply since bottoming out at USD 1,550-1,600/tonne CFR NE Asia in the week ended 11 November.

Cracker production cutbacks in China, South Korea and Taiwan, coupled with a surge in pre-Lunar New Year buying have seen BD prices in Asia doubling since the middle of November.
⌠We are getting more enquiries as there is a lot of interest from traders and China buyers to procure material before the Lunar New Year, a Korean supplier said.

China will be closed on 22-28 January for the Lunar New Year festivities.
January will be a short trading month as several countries in Asia including Hong Kong, South Korea, Taiwan, Singapore, Malaysia and Vietnam also celebrate the holiday.

However, resistance to the relentless BD price spikes is rising as several downstream styrene butadiene rubber (SBR) and butadiene rubber (BR) producers in China, South Korea and Taiwan have said they will cut the operating rates of their respective plants to 70-80% of capacity in January.
BD is a major feedstock for SBR and BR, the main raw materials used to make tyres for the automotive industry.


The SBR and BR markets are not expected to strengthen for the rest of the first quarter, which is a seasonally a slow demand quarter for the tyre-making industry.
The ongoing eurozone debt crisis and concerns over a global slowdown have also dampened buying sentiment as Asia is a major production centre for the global tyre market.
Many synthetic rubber producers expect demand to weaken after the Lunar New Year, which will in turn dampen demand for BD.

MRC

China gets approval for Afghanistan oil exploration bid

(bbc.co.uk) -- China has gained potential access to millions of barrels of oil after it won approval for oil exploration and extraction in Afghanistan.

The country's cabinet approved a deal to allow China National Petroleum Corporation (CNPC) to develop oil blocks in the Amu Darya Basin. The basin is estimated to hold around 87 million barrels of oil.

The deal comes as China is looking to expand its oil resources in wake of a growing domestic demand.

"The Afghan cabinet has ordered mines minister Wahidullah Shahrani to sign an oil exploration contract for Amu Darya with China National Petroleum Corporation," Afghanistan president's office said in a statement.

The state-owned CNPC will carry out the oil exploration and extraction with a local partner, the Watan Group.

CNPC will have to spend a considerable amount of money to explore the basin before it can actually find out about the amount of oil that may exist there.

"It is about five to ten years before they can get a feel of what is under the ground and start commercially producing it," he added.

The approval is a major win for China as it has been looking to invest in resource-rich Afghanistan. However, analysts said that resources is not the only sector that China is looking to invest in.

"The deal is a way of getting a foot inside the door," said Charles Chaw of China Knowledge Consulting.

The ongoing war in Afghanistan has seen its infrastructure and economy being damaged.

Analysts said that as peace returns to the country, it will require a lot of rebuilding activity in order to trigger economic growth in coming years, something that China is keen to tap into.

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PetroChina, Sinopec to invest USD 22 bln in east Zhejiang

(Reuters) -- China's top energy companies PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) have signed an agreement with the eastern province of Zhejiang on six projects worth about 139.1 billion yuan (USD 22 billion), media reported.

Among the top projects signed are two refinery-petrochemical complexes.
PetroChina is tying up with Royal Dutch Shell Plc and Qatar Petroleum to build a 400,000-barrel-per-day refinery and 1.2-million-tonne-per-year ethylene plant in Taizhou, the companies have said.
The project, with an approximate cost of USD 12.6 billion, has yet to receive environmental clearance from the central government, a key step before final approval by the National Development and Reform Commission.

The China Chemical Industry News reported that Sinopec would build an integrated plant in Zhenhai at a similar cost, without giving details.
An industry executive told that Sinopec, Asia's top refiner, wanted to expand its existing refinery-petrochemical complex in Zhenhai, home to a 460,000 bpd refinery and 1 million tpy ethylene facility.
"Sinopec wants to build another 300,000 bpd refinery and a 1.3 million tpy ethylene plant, an investment that may materialise after 2015," said the official.

The agreements also included a proposed liquefied natural gas (LNG) receiving terminal Sinopec wanted to build in Wenzhou that was likely to cost 8.83 billion yuan (USD 1.4 billion), the China Chemical Industry News said, without giving details.

PetroChina Kunlun Gas Co, a PetroChina unit that specialises in the downstream natural gas business, will build a compressed LNG facility and small-scale LNG facilities in Quzhou with 500 million yuan.
Sinopec would also focus on development of a 7,373 km gas pipeline between Xinjiang and Zhejiang with a capacity of 30 billion cubic metres per year, the papers reported.

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