Petrochemical Downturn
It has been found that Korean petrochemical companies’ paraxylene exports to China have dropped by 40 percent or so this year alone. Paraxylene is a raw material for PET bottles, smart phone LCD films, polyester fibers, etc. The ethylene and propylene exports are showing no signs of improvement, to add to their concerns.
According to the Korea Customs Service, S-Oil, GS Caltex, Hyundai Oil Bank, Samsung Total and SK Global Chemical exported US$883.03 million worth o paraxylene to China during the first quarter of this year, while combined exports were as high as US$1.230 billion in Q1 2013. The export volume dropped from 762,144 tons to 674,280 tons during the same period.
The decline was particularly conspicuous last month. The amount was US$254.98 million in that month, 69 percent less than the US$433.25 million of a year earlier. The problem is that the export unit price is dropping at the same time, from US$1,383 in January to US$1,305 and US$1,214 in the following months.
Until recently, paraxylene was a lucrative cash cow for Korean petrochemical companies, and most of the profits were derived from the Chinese market. However, the exports to China have been on a downward spiral all the way since the first half of 2013, mainly due to the slowdown of the Chinese economy.