Petchem battle for Chinese buyers

The battle for Chinese customers is expected to intensify, as Japanese and South Korean ethylene producers compete for market share in this country.
"Competition among petrochemicals exporters could further heat up in the scramble for the Chinese market," a polymer department official said.
LG Securities' Ryoo predicts South Korean petrochemical producers will continue bolstering their export drive into China, where they sell about 40 % of their exports allocation.
In the international market for polyethylene, Japanese makers also face competition from Kuwait.
According to the industry sources, Equate Petrochemical Co., a joint venture between a subsidiary of Kuwait Petroleum Corp. and Union Carbide, has recently started pre-marketing campaigns for 120,000-130,000 tons of high-density polyethylene. The company is mainly targeting the Philippines and Indonesia, and is offering prices at less than $ 650/ton.
Japanese companies are reportedly trying to keep a tight hold on thehigh-density polyethylene export price for China at $ 680/ton now.
The competition from Kuwait could make that more difficult.
Equate started up its new ethylene-based petrochemical complex with ethylene capacity of 650,000 tpy and polyethylene capacity of 450,000 t/y in September 1997.
"Given the current economic situation in Southeast Asia, Equate will likely find China a better home (for its products) than the Philippines and Indonesia," the Mitsui Chemicals official said. "Japanese makers could lose their market share in China, because they are unlikely to offer unreasonably cheap prices to beat their rivals."

The stakes in China are high for Japanese petrochemical producers, whether the increased competition comes from South Korea or Kuwait.
Ishihara of UBS notes that in 1997, Japanese exports of ethylene equivalent petrochemicals to China represented 20 % of Japan's annual output of 7.41 million tons.