Second quarter has surpassed expectations – Indorama Polymers
In recent days, prices of petrochemical products have spurted sharply and in case of some, have even touched highs, reached six months back. This is very good news for an industry which has been cutting output with regularity, since even before the economic crisis unfolded. To get a clear idea of the conditions prevailing in the global petrochemical sector, Fibre2fashion spoke to a senior official from Indorama Polymers Public Company Limited, Thailand, which is a group company of the Indorama group.
Indorama Group today is an emerging market specialist with plants in seven countries — Indonesia, Thailand, India, Sri Lanka, Turkey, Nigeria, Egypt and representative offices in USA, UK, and Singapore. Indorama is a global manufacturer of diversified industrial products — Polyolefins (Polyethylene and Polypropylene), Polyesters and Intermediates (Purified Terephthalic Acid, PET Resin, Filament Yarns and Staple Fibre), Spun Yarns, Fabrics and Medical Gloves.
Demand and in turn prices have increased considerably, since the second fortnight of March 2009, so we asked him whether he expects this trend to continue in to the second and third quarter, to which he said, “The second quarter of 2009 is on an uptrend and expect to remain on the uptrend or, as it is and the volumes have also increased which reflects the products linked to consumer staples have not seen demand drop but for discretionary items like automobiles and electronics, demand has dropped sharply. The financial crisis and liquidity crunch, as well have resulted in capacity closures, particularly in North America and Europe, due to which operators in production have seen higher utilization rates”.
“Refining as well as operating margins within the value chain had highly deteriorated in the last few months and with the spurt in prices, have they regained 2008 levels, was the next question we asked him to which he replied by saying, “There has been margin improvement in the Polyester chain, with the exception of MEG”. To a question whether, all their plants were running at optimum capacity, he replied in the affirmative by saying, “All our plants are operating at full capacity in Asia, Europe and USA”.
Next we asked him a very crucial question as to how would they tackle a hypothetical situation, if the petrochemical markets were to fall once again, to which he explained by saying, “The sharp fall post-July, 2008 is an exception where crude prices fell by US $100 a barrel from $147 per barrel to less than $50 per barrel in a matter of 4-5 months. It took 4 years for crude oil to move-up from $40 a barrel to $147 a barrel. This happened due to a liquidity crisis resulting in significant de-stocking. In the Polyester chain, prices change from month to month and there are price movements which can be addressed through inventory management”
We concluded the interview by asking him as how do they foresee the second and third quarter of 2009, to which he crossed his fingers and said, “The first quarter has been better than expected and until now even the second quarter has surpassed expectations”.
Fibre2fashion News Desk - India