Tightness in World PVC Supply Sees Koreans Constructing New Plant at Home, in China and Middle East.

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). Asian import volumes for key petrochemical products, including polyethylene, polypropylene and styrene would rise to over 20 million tons per year by 2014, said Don F.Bari, a Senior Vice President of the consulting firm Nexant Incorporated (San Francisco, California) when speaking at an industry conference in Tokyo. This would mean doubling the current figure of ten million tons and the increased imports, in the main, would come from the Middle East. Imports from the U.S. will probably decline and Europe will become a net importer during the same period. Total annual petrochemical export volume from the Middle East would hit around 25 million tons by 2014 with the current estimated exports standing at ten million tons, he said.

With these demand and import estimates in front of them, the Asian petrochemical industries are themselves undergoing a phase of vigorous domestic, regional, and foreign-based production expansion planning with South Korea among the most active.

Hanwha Chemical Corp (KSE:009830) (Seoul, Korea) is aiming to become one of the world's top ten polyvinyl chloride (PVC) producers by 2007 with a $256 million investment programme. Hanwha is expecting to bill well over $1 billion in annual sales after the three-year expansion of its PVC operations currently in progress. The company is studying the feasibility of constructing new PVC plants and lines in South Korea and China, but has yet to decide on the scope and siting of the plants.

Hanwha has allocated $126 million for PVC maintenance turnarounds at its Yeochung chemical complex (PEC 91000019) through 2007 and $100 million for new PVC investments. Debottleneckings will take $17 million and the change of electrolysers in its chloralkali plants to the ion-exchange membrane-cell method from the diaphragm system. Maintenance and debottlenecking operations will commence in October.

Anticipating China's that rapidly increasing demand for PVC construction materials will continue and that the close down of older PVC plants in the US and Europe will lead to a worldwide tightness in supply, the company is planning to increase its PVC output by 20% by 2007. Currently, it has two PVC plants at Ulsan and Yosu with a combined capacity of 500,000 tons a year.

The LG group (KSE:003550) (Seoul, Korea) is also expanding with ventures in China and in the Middle East. LG Chem is considering constructing an acrylonitrile butadiene styrene (ABS) plant at Daya Bay in the booming Guangdong region in southeast China. It would use feedstock supplied from the joint venture (CSPC) between China's CNOOC and Shell Petrochemicals (LSE: SHL) (London, UK) and has exchanged information with CSPC. LG Chem produces this range of chemicals at its domestic Yeochung complex (PEC 91000074).

The CSPC 800.000 ton a year cracker is due to come onstream at Daya Bay in early 2006. In addition to offtaking product from CSPC's 550,000 ton/year styrene and 250,000 ton/year propylene oxide (PO) facilities LG Chem could also offtake from CSPC's output of 155,0000 ton/year butadiene.

Although, no final decision on the ABS plant has been made LG has stated that it plans to add ABS capacity in China by 2008 and the ABS, PS and thermoplastics projects are expected to start up after the CSPC complex has come onstream. The company might go for a new Greenfield site or it could expand its existing Chinese plants in Ningbo and Zhejiang. Its target is to boost capacity in China by 66% from the current 300,000 tons/year to 500,000 tons/year.

In the Middle East, LG International and LG Engineering have won a $182 million contract in Oman from the Oman Polypropylene Company (OPC) to construct a polys plant. The 340,000-tons/year project in the north east of Oman is scheduled for completion by September 2006.

Oman Oil Company (OOC) is talking to financial institutions on the plant project, which will be built, adjacent to the 75,000 bpd Sohar refinery (PEC 94600039) that is under construction. OOC holds 60% and LG International 20% of the project. OPC is considering where to pave the balance of 20%, which was given up by ABB Lummus Global (NYSE:ZURICH) (Zurich, Switzerland), which pulled out of the project in April.