Asia and the Middle East are expected to add 4.7 million tons of polyethylene capacity in 2010

According to ICIS estimates, Asia and the Middle East are expected to add 4.7 million tons of polyethylene capacity in 2010. In order to avoid competition with cheap polyethylene from the Middle East, some naphtha-based polyethylene producers in Northeast Asia have switched to producing products that are not widely produced by producers in the Middle East. The polyethylene products exported to Asia by producers in the Middle East are mainly film grade, injection film grade, and blow molding grade.

Market participants recently said that due to the impact of rising crude oil prices in the Middle East, polyethylene producers in Asia will face a difficult squeeze in profits in the second half of the year. A polyethylene producer based in Southeast Asia that uses naphtha as the raw material said: “At present, we can still maintain certain profitable space, but the situation in the second half of the year will depend on whether or not polyethylene producers using natural gas as feedstock in the Middle East will Asian markets dump their low-cost products."

Although the profits of the cracker and polyethylene plant in Asia are clearly declining, there is no possibility of a sharp decline in the second quarter.

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