Surging Competition Forces Asia Plastics-Makers to Stifle Output

(Bloomberg) — Some of Asia’s biggest producers of the building blocks used to make plastic are cutting processing rates after a robust expansion of capacity last year led to rising feedstock costs and weakening profit margins.

Output has surged, while oil-based naphtha has become more expensive due to increased demand and the rising cost of crude. That’s combined to drive profits from converting naphtha to ethylene to the lowest since July. Ethylene cracker operators including Taiwan’s Formosa Petrochemical Corp. and South Korea’s LG Chem Ltd. responded by trimming processing, said traders and an analyst.