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Domestic petrochem sector profits from crisis in South Korea
Jun '08
The strike by the truck drivers in South Korea entered its 17th day. The situation has became quite serious as goods cannot not be shipped out of the country and export of containers at the terminal has been reduced to just 20 percent.

As a result, it has brought about a golden opportunity to petrochemical manufacturers of Taiwan, in the absence of products from their market rivals. Sellers are finding it easy to pass on the higher cost of raw material through price hike as the buyer's do not have any other option.

Almost all the inventories of polypropylene (PP) production plants are full and manufacturers have plans to cut down production in the absence of transportation facilities.

Situation in South Korea is all the more bleak as Samsung Total, the country's leading PP production plant with an annual capacity of 300,000 tons had to undergo a force majeure and shut off boilers due to an unexpected mechanical failure. This pushed the PP spot prices in Asia to over US $2,000 per ton while propylene prices soared to $1,820 per ton, representing a surge of 16.6 percent or $290 per ton in just four weeks.

This has opened up a lucrative business opportunity for Taiwanese petrochemical manufacturers because in the absence of Korea, its strongest competitor and Asia's largest exporter of petrochemical intermediate raw materials, the country gets to grab a larger share of the global market.

Fibre2fashion News Desk - China

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