South Korea is among the latest countries to voice concern over falling world petrochemical prices. Its commerce ministry forecast that the value of its exports would dip 11 per cent to $8.4 billion in 2001 over the previous year due to weaker oil prices.
Ministry official Cho Hyun-hoon said petrochemical prices fell 20 per cent year on year with polyethylene dropping 30 per cent to $560 per tonne.
"A steep fall in export prices was due largely to oversupply in the region, stemming from increased facilities in the Middle East and Taiwan as well as falling crude prices," he is reported to have said.
The Korean comments follow ones made by senior officials of the Saudi Basic Industries Corporation (Sabic) before the September 11 attacks in which they stressed the need for co-operation among petrochemical companies in the Middle East to avoid a price war in the face of overproduction in the region and an economic slowdown in the US and Japan.
Mohammad Al Mady, Sabic vice chairman and managing director, said his company would continue to be in a strong position in terms of access to hydrocarbon supplies as Saudi resources remained a "key foundation for our existence". Another executive Nasser Al Sayyari said "the biggest challenge of all would be to find markets for our products without creating instability in the market."
Saudi Arabia and other major petrochemical producers in the Middle East are in the process of expanding their petrochemical production.
Al Sayyari said Sabic and its affiliates believed that the only way out of the cut-throat competition would be to co-operate through a "careful spacing out of new projects," adding it was important for all not to wreck the market through over-production. Iran has invited Gulf countries to join in the creation of an Opec (Organisation of Petroleum Exporting Countries)-like cartel for petrochemicals in order to promote co-operation in research, planning, production, marketing, transportation and distribution of products. It has recommended that such a body should have a production and pricing mechanism similar to one Opec has.
