Ethylene profit gains may end on China supplies

(Bloomberg) -- Profits from making ethylene may be capped in Asia next year after Chinese production jumped to the highest level in eight months.

The net return from producing ethylene by putting naphtha through a cracker is $150 a metric ton, according to Chemical Markets Associates Inc. It was $250 a ton in July, after a fire at Formosa Petrochemical Corp.'s No.1 cracker in Taiwan reduced supplies. The profit may drop to $100 by January as new plants in Asia ramp up utilization rates.

China, the world's second-biggest crude consumer, is buying less ethylene as it boosts domestic production after a 42 percent jump in oil-refining capacity in five years. Manufacturers in South Korea and Taiwan count on China to buy 80 percent of their ethylene-based exports.

⌠There's still supply pressure from new crackers, said Suppata Srisuk, an analyst at Bualuang Securities Pcl. ⌠Most of the crackers in Korea and Japan will be the first group to shut down if the ethylene spread gets too low.

MRC

(Plastemart) --Indian polymer producers have announced price reductions in polypropylene (PP) and polyethylene (PE), as imports grow amid low domestic demand. Demand is low because during the festive season of Diwali, converters run plants at reduced capacity.

This trend is contrary to the rising petrochemical prices globally. In the global markets, as crude oil prices rise, polypropylene (PP) price has risen by US$30, and polyethylene (PE) prices have gone up by US$50 compared to previous month's price amid supply constraints caused by maintenance shutdowns. This is the first time since May that prices have been reduced in India by producers.

Uptil now, Indian polymer producers kept prices very high despite falling crude and global polymer price. Even with the current price reductions, polymer prices in India are still not at par with global levels. As newer capacities come onstream in India, pricing of polymers will be critical. The Indian market is slightly oversupplied due to expected added capacities and rise in imports as other regions face dwindling demand.

MRC

(Plastemart) -- About 500,000 people are on strike across France to protest draft legislation in parliament. This strike is in addition to the ongoing strike by oil refinery workers opposed to the pension reforms that is contributing to fuel shortages across the country.

11 refineries in France have halted operations or reduced output, fuel is out of supply in thousands of gasoline stations in France because strikers are blocking deliveries, and gas prices have propelled because of panic buying.

These strikes are having repercussions beyond France's borders. Analysts say that if the strikes continue, fuel shortage might push prices up across Europe in the coming months.

MRC

(Plastics News) -- Fox Petroleum Inc. has announced that its Canadian operating subsidiary, Resource Polymers Inc., has finalized its PET recycling plant and that it has began processing PET along with polystyrene.

Created to produce recycled PET flake and recycled polystyrene flake from post-consumer PET bottles and agricultural scrap, Resource will bring the first phase of its Hamilton facility to full capacity in the first quarter of 2010.

By the end of the first phase of the project, the operation will have the capability to recycle up to 30 million pounds of PET bottles.

The primary users of these recycled flake materials will include carpet, fiber and agricultural manufactures and additionally the recycled resins.

MRC

(Plastics News) -- Packaging film producer Flexpol SP z.o.o. is planning an investment of nearly 13 million euros to manufacture novel biaxially oriented polyethylene film products.

Flexpol, a producer of biaxially oriented polypropylene films based in Plock, is also undertaking a major modernization and expansion of its plant in Plock. The scheme to introduce the BOPE manufacture is expected to create at least 30 new jobs and is scheduled to be launched late next year.

Both Flexpol projects involve the introduction of new technology which has been utilized in Poland for less than a year. This means the company will qualify for additional funding from the EU on top of financial incentive assistance in the Polish special economic zone.

Flexpol is a part of Supravis Group, a leading manufacturer of plastics packaging materials in Central and Eastern European markets. It has achieved an annual profit of 60 million euros and has other separate subsidiaries in Hungary and Slovakia.

MRC