03 April 2007 08:11 [Source: ICIS news]
SINGAPORE (ICIS news)--Asian ethylene prices have dropped by 29% to the low $900s/tonne CFR (cost and freight) northeast Asia (NE Asia) since January as a result of a possible oversupply in the region, traders said on Tuesday.
Increased supply from South Korea, Taiwan and the Middle East dented market sentiment causing northeast Asian spot prices to fall for the past nine consecutive weeks, their longest losing streak since 25 February 2005, they added.
"There are plenty of cargoes but will there be enough outlets to go to? That remains a question," a Japanese ethylene trader said.
The latest bids from Taiwanese buyers were heard at $900-910/tonne CFR Taiwan for late April/early May cargoes, with offers at least $20-30/tonne apart, traders said.
Spot deals had yet to be concluded so far this week, but buyer’s resistance over and above the $900/tonne CFR NE Asia mark was still strong.
The market’s length was expected to come from expanded capacities in South Korea, Taiwan and fresh capacities from the Middle East, pushing sellers to offload existing supply quickly, traders said.
Full ethylene tanks at FPC’s Mailiao site forced vessels to wait up to nearly a week to discharge cargoes, traders said.
LG Chem – South Korea’s third largest cracker by ethylene capacity was in midst of restarting its cracker early on Monday with an eye for possible two to three extra ethylene spot cargoes for export, market players said. Its ethylene capacity has been expanded to 740,000 tonnes/year from 260,000 tonnes/ year.
New exports would also come from Taiwan’s Formosa Petrochemical Corp where it will start up its 1.2m tonne/year cracker in the second quarter.
The Asian ethylene market would not be able to shake off its sluggishness just yet as ethylene derivatives demand had not risen significantly, traders and buyers said.
Asian polyethylene (PE) market – a major driver of ethylene market – was priced relatively stable at $1,210-1,300/tonne CFR China despite plunging ethylene values as sellers managed to maintain price discipline, traders said.
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