Tri Polyta moving toward upstream integration<\/p>\n
JAKARTA (JP): Publicly-listed petrochemical giant PT Tri
\nPolyta Indonesia said yesterday it was considering a merger with
\nits main feedstock supplier, PT Chandra Asri Petrochemical
\nCenter, to move toward upstream integration.<\/p>\n
Tri Polyta vice president commissioner Peter F. Gontha said
\nthe move would reduce the company's risk profile from feedstock
\nprice volatility.<\/p>\n
\"We are in the preliminary stages of examining a propane
\ndehydrogenation joint venture to produce propylene, our main
\nfeedstock,\" Gontha said after the company's annual shareholders'
\nmeeting.<\/p>\n
Tri Polyta, listed on the Jakarta and New York stock
\nexchanges, produces polypropylene, a plastic material used to
\nmanufacture a wide range of products such as carpets, rope,
\ntextiles and automobile parts.<\/p>\n
The company, in cooperation with Nippon Shokubai Company Ltd.
\nand Tomen Corp., is currently moving sideways into building
\nacrylic acid and acrylic ester production facilities.<\/p>\n
The company is also looking into another venture possibility
\nto produce oxo-alcohol, the main feedstock for producing acrylic
\nesters.<\/p>\n
Gontha said that by 1999 Tri Polyta would need 520,000 tons of
\npropylene a year to produce polypropylene, acrylic acid, acrylic
\nester and oxo-alcohol.<\/p>\n
By then its main feedstock supplier PT Chandra Asri would
\nproduce a maximum 300,000 tons a year.<\/p>\n
\"As there will be a shortage, we are evaluating the
\npossibility of building a propane dehydrogenation facility...
\nOtherwise, we will have to import the balance,\" he said.<\/p>\n
Chandra Asri currently supplies about 240,000 tons of
\npropylene a year to Tri Polyta which needs about 360,000 tons.
\nTri Polyta imports the balance, he said.<\/p>\n
Propylene and polypropylene are currently protected by import
\ntariffs of 25 percent and 40 percent respectively.<\/p>\n
Tri Polyta said the propane dehydrogenation facility would be
\ncompleted in the second half of 1999.<\/p>\n
It would have a designed annual minimum capacity of 350,000
\ntons and a maximum capacity of 500,000 tons of polymer-grade
\npropylene.<\/p>\n
The company said the investment for propane dehydrogenation
\nwould be about US$250 million to $300 million, 30 percent of
\nwhich was expected to be equity financed and 70 percent through
\nproject loans.<\/p>\n
Natural gas, the basic material for propane is abundant in
\nIndonesia, the Middle East and Australia.<\/p>\n
\"We are still looking for a gas supplier for the facility,\"
\nGontha said.<\/p>\n
He said Tri Polyta was considering a merger with Chandra Asri
\nto boost performance.<\/p>\n
\"The matter is being studied...but no decision has been made
\nyet,\" Gontha said.<\/p>\n
Gontha declined to give further details about the possible
\nmerger with the propylene producer. Chandra Asri uses naphta,
\nprocessed from crude oil, to produce propylene.<\/p>\n
He said mergers between upstream and downstream petrochemical
\ncompanies were sometimes done to limit risk amid sharp price
\nfluctuations in the international market.<\/p>\n
He said currently propylene prices in the region were soaring
\nto some $700 a ton, up from $400 last year, due to the lack of
\nsupply.<\/p>\n
On the other hand, polypropylene prices were dropping to some
\n$850 a ton, from $950 last year, due to the abundance of
\nsuppliers.<\/p>\n
\"This cyclical situation is nothing special. But it has cut
\nour margin,\" Gontha said.<\/p>\n
Tri Polyta posted a net profit of Rp 26 billion ($10.9
\nmillion) last year, down sharply from Rp 58.52 billion in 1995.<\/p>\n
The company yesterday decided not to pay dividends and to add
\nlast year's profit to its retained earnings.<\/p>\n
\"We decided not to pay dividends because we are not sure when
\nthe downcycle will end,\" Gontha said. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tri-polyta-moving-toward-upstream-integration-1447893297",
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