29 July 2008 05:12 [Source: ICIS news]
By Peh Soo Hwee
Rising upstream crude and naphtha values this year had earlier forced some producers to trim cracker operating rates by up to 20% but these firms were currently rethinking their positions as raw material prices started heading south from two weeks back.
Naphtha was currently trading below $1,100/tonne CFR (cost and freight) ?xml:namespace>
“If the (ethylene) market price is more than $1,500/tonne, it’s better to increase production,” a company source from Rayong Olefins, which runs
He added that the company was reviewing whether to raise production at its 800,000 tonne/year cracker beyond 90-95% but no decision has been made.
In southeast Asia, some producers place the break-even spread between naphtha and ethylene at around $400/tonne although this can vary depending on the efficiency of the cracker, they said.
Other cracker operators such as Petrochemical Corp of Singapore (PCS) and Taiwanese state refiner Chinese Petroleum Corp (CPC) are also looking at ramping up production partly on the back of scheduled maintenance shutdowns at their facilities in July-August.
PCS shut its 475,000 tonne/year No 1 cracker for maintenance on 16 July, while it is running the 615,000 tonne/year No 2 cracker at a reduced rate of 80-85%.
CPC will also shut its largest cracker in
“We have domestic contracts to fulfil but it all depends on naphtha,” said a company official in Mandarin, adding that it preferred to monitor the situation due to volatile raw material prices.
Some producers, however, said that it may not make sense to raise cracker operating rates as ethylene prices had also weakened in line with the fall in naphtha values.
Ethylene spot prices came off a near 16-year-high of above $1,700/tonne CFR northeast (NE)
“It all depends on the product price,” a company source from Chandra Asri,
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