PT Chandra Asri to sell all ethylene products at home
CILEGON, West Java (JP): PT Chandra Asri will sell all its ethylene production on the domestic market beginning in August following a deal with PT Peni to purchase 102,000 tons or 20 percent of its total output.
"We're finalizing a deal with PT Peni, and hopefully we'll start supplying the company in August," Tommy Satriotomo, Chandra Asri's olefin sales manager, said here yesterday.
He noted that he expects the purchase contract with Peni -- one of the two producers of polyethylene in Indonesia, to be in effect for five years, based on the prevailing market price.
Chandra Asri has so far been producing at around 63 percent or 322,000 tons of its designed capacity of 510,000 tons. It sells about 80 percent of that output on the domestic market.
He said the agreement with Peni would also include a clause which would require that company to buy ethylene at the agreed price whenever the market price dropped to a certain level,
Chandra Asri, which was granted tariff protections of 25 percent for both its ethylene and propylene products in February, is jointly owned by Prajogo Pangestu, Bambang Trihatmodjo -- President Soeharto's second son -- and Marubeni, Toyo Engineering and Showa Denko of Japan.
PT Peni is 51 percent owned by British Petroleum Chemicals, with the remaining shares held by President Soeharto's eldest son, Sigit Harjojudanto, and his associates.
According to Tommy, the domestic demand for ethylene was recorded at 700,000 tons last year and has been growing by 15 percent during the last few years.
He added, however, that his company could not produce at the full capacity due to keen competition from major suppliers in South Korea and Japan.
"Those foreign suppliers that have been in production much longer than Chandra Asri can sometimes sell at lower prices than ours," Tommy said.
Full capacity
Tommy said he was confident that his company would be able to operate at its full capacity later this year, however.
"In 1998, we will increase our yearly production capacity to 675,000 tons of ethylene, about 300,000 tons of propylene and about 300,000 tons of pyrolysis gasoline," he said.
Chandra Asri, with a total investment of US$2 billion, began operations last May with a designed capacity of 510,000 tons of ethylene per year, 240,000 tons of propylene, 300,000 tons of polyethylene and 230,000 tons of pyrolysis gasoline.
During its first year, the chemical plant manufactured 322,000 tons of ethylene, 185,000 tons of propylene, 160,000 tons of pyrolysis gasoline and 178,000 tons of polyethylene.
Tommy said Chandra Asri had been selling its propylene production entirely to PT Tri Polyta Indonesia, the country's largest producer of polypropylene which is owned by Pangestu, Trihatmodjo and their business associates.
Pyrolysis gasoline has all been exported for further processing overseas, he said.
Chandra Asri procures its condensate feedstocks from the Kangean gas field in the Java Sea and naphtha from the Cilacap oil refinery in Central Java and the Middle East.
The chemical plant is also capable of using liquefied petroleum gas as a feedstock, but at the moment, it has no storage facilities for the raw material, Tommy added. (13)