Asian ethylene facing strong price outlook in H2 2005

22 November 2004 00:39  [Source: ICIS news]

SINGAPORE (CNI)--Asian ethylene prices are expected to be bullish in 2005 even though the prices may face some temporary downward correction in the first half, a petrochemical analyst told CNI recently.

The worldwide ethylene demand is expected to rise by 3-4m tonne in 2005, compared with the 2m tonne additional capacity expected to come onstream over the next 12 months, he said. The world ethylene demand is pegged around 900m tonne.

The Asian ethlyene market is likely to see a temporary downward price correction in the first half of 2005 in a knee-jerk response to  the new capacities expected to come onstream in China, the analyst said.

BP Secco is expected to commission its 900 000 tonne/year naphtha cracker in Shanghai in March 2005, and BASF-YPC's 600 000 tonne/year Nanjing cracker will come onstream in the middle of the year. Shell Chemicals’ 800 000 tonne/year Daya Bay cracker will be commissioned only in November.

Despite the weak outlook for the first half, the price outlook remains bullish for the second half because the growth in demand should outpace the rise in capacity, he said.

However, a trader said that the second half outlook may remain bearish if Iran’s National Petrochemical Co’s (NPC) start up their No 6 and No 7 crackers sometime in 2005. Both project have been delayed numerous times for the past four years.

Asian ethylene prices have stabilised around $1100/tonne FOB North Asia after falling from the record high of $1300/tonne about two months ago. 

By: Edgar Ang
+65 6780 4359

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