SOUTH KOREA TO PAY MORE FOR JAPANESE ETHYLENE
South Korea will pay about 20 pct more for
ethylene imported from Japan in the second quarter of the year
because increased plastic production in both countries has
boosted demand and tightened supplies, chemical industry
sources said.
    South Korea has agreed to pay Japanese trading houses just
over 400 dlrs C and F per tonne, up from an average of 350 dlrs
in the first quarter and throughout 1986, they said.
    South Korean demand for imported ethylene this month has
risen to 17,000 tonnes from 10,000 last month, and the country
may face difficulties covering the extra volume, they said.
    <Korea Petrochemical Industries Corp>, a producer of high
density polyethylene (HDPE) and polypropylene, will more than
double its ethylene requirements to 9,000 tonnes a month from
4,000 when it completes a plant expansion at the end of this
month, the sources said.
    <Honan Ethylene Corp's> import requirements have risen to
8,000 tonnes a month from 6,000 tonnes last year to meet strong
demand from <Honan Petrochemical Co>, which makes HDPE and
ethylene glycol, and <Hangyang Chemical>, which produces
low-density polyethylene and vinyl chloride monomer, they said.
    But Japan's ethylene plants are already operating at almost
full capacity of 4.5 mln tonnes a year just to fulfill domestic
demand, the sources said.
    "And even if Japan had the additional ethylene, there is a
logistical problem of finding extra appropriate-sized vessels
to ship it to Korea," said one trading house source.
    Japanese trading companies are looking to alternative
sources to supply South Korea's needs, including Saudi Arabia,
Qatar and Mexico, they said.
    But long-haul voyages are expensive as the product has to
be shipped at a temperature of minus 103 degrees centigrade to
keep it in a liquid form, they said.
    Japan has no plans to invest further in the ethylene
industry in order to cope with the additional demand, despite
rising prices, trading house sources said.
    South Korea has two projects in hand which will increase
its ethylene production capacity by 500,000 tonnes a year by
the end of 1989, so the strong demand surge for imports is only
a medium-term trend, they said.
 REUTER
