Tri Polyta poised to become largest polypropylene producer<\/p>\n
JAKARTA (JP): Tri Polyta Indonesia (TPI), buoyed by the recent
\nsuccess of its international share offering, is confident of its
\nfuture as the largest single polypropylene plant in Southeast
\nAsia, according to the maiden issue of the Singapore-based Asian
\nChemical News weekly magazine yesterday.<\/p>\n
The weekly quoted Lloyd Lochra, TPI's vice president, as
\nsaying that the company's offering of 7.47 million American
\nDepositary Shares, each representing 10 shares, was now trading
\nat a range of US$27-28, up from their July 21 listing of $21.<\/p>\n
TPI brought its first two polypropylene trains on stream in
\nSerang, West Java, in August 1992 and construction of the third
\ntrain, which will be the country's first production of higher
\nvalue-added copolymer resins, is underway with the start of
\ncommercial operations due in the third quarter of 1995.<\/p>\n
The existing plant, which uses Unipol gas-phase technology,
\nwas effectively debottlenecked at the end of 1993 by almost 35
\npercent, increasing the effective capacity to 215,000 tons a year
\nfrom 160,000 tons. The third reactor train will add another
\n105,000 to 120,000 tons a year at a cost of around $78 million.<\/p>\n
Investors have been encouraged by strong expected growth rates
\nin polypropylene demand, given the fact that Indonesia's per
\ncapita consumption of polypropylene is one of the lowest in Asia.
\nTotal demand in 1993 was 355,000 tons, which was met by slightly
\nover 50 percent being imported.<\/p>\n
The only other current domestic producer is the state-owned
\noil company Pertamina, whose capacity of 6,000 tons a year is
\nbeing increased this year to 40,000 tons.<\/p>\n
Demand<\/p>\n
Despite the fact that this production, combined with TPI's,
\nbrings the total domestic capacity in 1995 to beyond the existing
\ndemand, TPI believes anticipated growth in domestic demand will
\ncontinue to exceed capacity in the foreseeable future.<\/p>\n
A third polypropylene project is also underway, which will
\ninvolve production of 100,000 tons per year of polypropylene at
\nBalonan, due to start up at the end of 1995. This project,
\ninvolving a joint venture between local company Tirtamas
\nMajutama, BP Chemicals and Nissho Iwai, will involve a unit based
\non Himont's Spheripol process. Although BP says the product is
\nprimarily intended for the domestic market, TPI believes less
\nthan 50 percent of this production will compete with it on the
\nlocal market.<\/p>\n
Other licenses for polypropylene projects have been awarded by
\nthe government but Lochra believes no other domestic facilities
\nare under development.<\/p>\n
TPI points to the competitive advantage it gains from upstream
\nintegration with PT Chandra Asri and downstream with affiliate PT
\nArgha Karya, which takes around eight percent of sales. Although
\nTPI is currently entirely dependent on imported supplies of
\npropylene feedstock, a $1.7 billion olefins complex which will
\nproduce 250,000 tons a year of polymer grade propylene is under
\nconstruction at Chandra Asri, adjacent to the TPI plant and is
\ndue on-stream in mid 1995.<\/p>\n
The polypropylene producers intend to source a sizable portion
\nof its propylene requirements -- which will total 360,000-370,000
\ntons per year once the third train is on stream -- from Chandra
\nAsri, which has the same principal shareholders as TPI: the
\nBimantara Group, Prajogo Pangestu of the Barito Pacific Group and
\nthe Napan Group. This should allow a reduction in raw material
\ncosts.<\/p>\n
Imported propylene is currently subjected to a five percent
\nimport duty, although it is likely to increase substantially upon
\nthe commencement of Chandra Asri, which will be the first
\ndomestic propylene producer. However, under tariff reforms
\nannounced by the government in June 1994, TPI may be eligible for
\na two-year reduction in, or exemption from, the tariffs on
\npropylene imported to meet expanded capacity from the third
\ntrain.<\/p>\n
TPI's own polypropylene selling prices are also protected by
\nhigh tariffs on import. These currently amount to a 20 percent
\ntariff and 20 percent surcharge, which totals $313 per ton in the
\nyear to June. As TPI's polypropylene prices generally reflect the
\ndollar levels of imported polypropylene plus the effect of the
\ntariff and duties, the tariff protection accounted to 36.5
\npercent of its sales in the first quarter this year. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tri-polyta-poised-to-become-largest-polypropylene-producer-1447893297",
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