LPG subsidy burden climbs as Indonesia considers price hike

MOSCOCW (MRC) — The cost of Indonesia's subsidy on LPG is increasing, leading to the country paying at least half of the cost of the fuel, said Timesofindia citing Pertamina.

The LPG subsidies are more than customers pay for the fuel in some instances, said Pertamina Marketing Director Muchammad Iskandar, amid discussions on increasing LPG prices to reduce government spending.

Net oil importer Indonesia's fuel subsidies have been blamed for creating a false economy, widespread smuggling and corruption. Soon after taking office in 2014, President Joko Widodo cut government fuel spending by more than 90 percent, and shifted the burden of petroleum subsidies to Pertamina.

Now Pertamina is selling subsidized LPG in 3 kg containers at 4,750 rupiah (USD0.3574) per kg, less than half of the company's breakeven price of about 10,500 rupiah per kg, said Isakander. Millions of Indonesians are taking advantage of a program to shift households toward LPG and away from using the more costly and dangerous kerosene for cooking fuel.

"What is more worrying is that the subsidy burden is increasing, because consumption is increasing because prices are going up," Iskandar told reporters. "The numbers of (LPG) users are increasing," he said, noting that people had switched over from using larger unsubsidized 12 kg LPG canisters to take advantage of the lower prices. "Water pumps in paddies once used oil but now use LPG because it's the cheapest."

Energy and Mineral Resources Minister Ignasius Jonan said the 2017 budget allowed for government to increase LPG prices by 1,000 rupiah, but no decision has been made yet. Any increase to LPG and other fuel prices would depend on directions from President Joko Widodo in a cabinet meeting, Jonan said.

Chief economic minister Darmin Nasution said last month that a price increase would not happen until Ramadan, the Muslim fasting month, ends at the end of June as part of a plan to control inflation. Typically inflation picks up in the Muslim-majority country during the fasting month as people stock up on food, buy new clothes and travel to their home towns.

Indonesia was expected to import around 70% of its demand LPG this year, a Pertamina official said in January, and imports were expected to reach 5 MMt, up 13% from 2016 levels.
MRC

MOSCOW (MRC) -- Shanghai Golden Phillips Petrochemical Co is likely to restart a high density polyethylene (HDPE) plant, as per Apic-online.

A Polymerupdate source in China informed that the company has planned to resume operations at the plant on June 12, 2017. The plant was shut owing to lack of feedstock availability end-May 2017.

Located in Shanghai, China, the HDPE plant has a production capacity of 135,000 mt/year.

As MRC wrote before, on 10 April, 2017, Shanghai Golden Phillips Petrochemical Co restarted its HDPE plant in Shanghai, which was shut owing to weak economic fundamentals.

Shanghai Golden Phillips Petrochemical Co. Ltd. manufactures petrochemical products. The company produces and sells blow molding products, films, pipes, and wire resins. Shanghai Golden Phillips Petrochemical also offers after sales services.
MRC

MOSOCW (MRC) - Negotiations on European polyvinyl chloride (PVC) prices for June delivery to the CIS markets have begun this week. Despite the reduction in the price of ethylene in the region, some producers are not going to reduce PVC export prices, according to the ICIS-MRC Price Report.

June contract price of ethylene was agreed down EUR35/tonne from the level of May, which makes it possible to talk about reducing the cost of polyvinyl chloride by EUR17.5/tonne.

European producers still have serious restrictions on exports due to the planned shutdowns for scheduled maintenance works and strong demand in the domestic market, and as a result, only a few producers have reduced PVC export prices.

Some producers have offered price reduction at the level of EUR10/tonne in comparison with the May price level.
In general, negotiations on June shipments of suspension polyvinyl chloride (SPVC) to the CIS markets are held in the range of EUR850-940/tonne FCA for K64/67 PVC. Prices for K70 PVC were offered on average up by EUR10-20/tonne.

Significant export restrictions have remained for several months. In particular, there were no price offers from the German company Vinnolit, while Polish Anwil plans to ship most of export orders after 19June because of the shutdown for maintenances.
MRC

MOSCOW (MRC) -- Huntsman Corporation announced that it has joined the American Chemistry Council (ACC), an advocacy organisation for the US chemical industry, based in Washington, DC, USA, as per GV.

Huntsman President and CEO ­Peter Huntsman has been appointed to ACC’s Executive Committee and Board of Directors.

As MRC informed before, in March 2017, Huntsman Corporation announced a plan to close the white end finishing and packaging operation of its titanium dioxide (TiO2) manufacturing facility based in Calais, France, during the third quarter 2017. The announced plan follows the 2015 closure of the black end manufacturing operations and would result in the closure of the entire facility.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2016 revenues of approximately USD10 billion.
MRC

MOSCOW (MRC) -- Sasol reported that construction of its new alkoxylation plant in Nanjing, China, has started, with the new plant expected to be fully operational by early 2019, said Engineeringnews.

The new production unit will modernise and expand Sasol's current alkoxylation capacity, research and development facility and technical support capability in Nanjing, while strengthening its position in China and allowing it to better meet the growing demand for specialty chemicals in this growth market.

This project entails the construction of an alkoxylation plant with a capacity of about 150 000 t/y, with the option of using either branched or linear alcohols to meet differentiated customer requirements in applications such as detergent, personal care, textiles and leather, metal working and lubrication, paper inks and coatings and the oil and gas recovery markets.

"With China's economy forecast to represent 40% of the world chemical demand by 2020 and its ongoing shift towards high-value and differentiated segments, China is an important market for Sasol. The new production unit will more than double Sasol's alkoxylation production capacity and Sasol's state-of-the-art technology offers our business partners significant benefits in terms of safety, reliability and flexibility," said Sasol chemicals business VP Fleetwood Grobler.

The new site, located in the Nanjing Chemical Industrial Park, occupies about 35 acres.
MRC