By John Richardson
ASIAN higher cost polyvinyl chloride (PVC) producers are facing the twin squeeze of increased electricity costs and very competitive exports from the US, according to an industry source the blog met with in Taipei, ahead of tomorrow and Friday’s 2013 Asia Petrochemical Industry Conference (APIC).
Such is the pressure on the Japanese, and perhaps even the South Koreans, that rationalisation of capacity might have to take place, he added.
“Electricity costs are 3 cents a kilowatt in the US because of shale gas, making chlor-alkali units there exceptionally efficient. And, of course, the US has very cheap ethylene, thanks again to shale gas, for ethylene dichloride (EDC) production,” said the source.
“This compares with 10-12 cents a kilowatt power costs in Japan – much higher than used to be the case before the 2011 tsunami forced Japan to import much more liquefied natural gas (LNG) to meet its electricity generation needs.”
This is illustrates why three major themes look set to dominate this year’s APIC conference: US shale gas, US shale gas and more US shale gas.
“A couple of years ago, coal-to-olefins (CTO) in China were heavily featured in the discussions at APIC, but now people seem to recognise that CTO will have a limited impact,” said a petrochemicals consultant, again in Taipei ahead of APIC.
Returning to the subject of PVC, we might perhaps see a great deal of overseas interest in investing in the US chlor-alkali and vinyls sector, which again of course would be linked to the foreign interest in building steam crackers in the States.