12 February 2009 05:33 [Source: ICIS news]
By Peh Soo Hwee
SINGAPORE (ICIS news)--Recent gains in Asian ethylene spot prices may soon end amid weakening demand downstream, as new polyethylene (PE) and monoethylene glycol (MEG) exports from the Middle East emerge in the second quarter, industry sources said on Thursday.
The start up of nine new crackers in China and the Middle East this year (see table below) and the onslaught of the global economic downturn have made it difficult to predict the outlook for ethylene and its derivatives despite a rebound in petrochemical prices since the start of 2009.
In mid-February, Rabigh Refining and Petrochemical Co (PetroRabigh) will start up its 1.25m tonne/year facility in Rabigh, located at the Red Sea coast of ?xml:namespace>
Derivative products such as PE and MEG are slated to be shipped out to Asia from
“If (Rabigh) starts exporting PE to
A fall in derivative pricing, particularly PE, is expected to derail demand for ethylene, which had risen to a four-month high of $700/tonne (€ 539/tonne) (CFR) northeast (NE) Asia level in early February – a level not seen since 17 October 2008 – as importers and end-users replenished stocks after the lunar new year holidays in late January.
China's measures to stimulate the domestic economy through ensuring ample liquidity could also have contributed to the price gains.
In contrast, ethylene had slumped to a five-and-a-half year low of $350-410/tonne CFR NE Asia in late November last year as the global economic crisis unfolded.
The price recovery, however, could be short-lived due to strong resistance to offers above $700/tonne CFR Asia amid uncertainty over the price outlook for ethylene derivatives.
“Based on today’s margins, we can accept ethylene at $700/tonne but come April, things could turn around quickly,” said a southeast Asian-based PE producer.
Some market participants said an anticipated reduction in demand from
The country imported 721,204 tonnes in 2008, representing a 41 percent increase from 2007 volumes of 509,821 tonnes.
“It won’t be easy for ethylene prices to keep going up due to new start-ups in
Tough decisions could loom ahead for naphtha-based cracker operators in
Regional producers had scaled back ethylene production to 70-80% of capacity in October and November 2008 due to the deepening economic crisis, which had hurt exports of finished goods.
As of February 2009, most of the crackers in
“It's very difficult to load up after the new crackers in the
Cracker projects on stream in 2009?xml:namespace> Location Company Name Capacity (t) Start up ?xml:namespace> Rabigh Refining and Petrochemical Co 1,250,000 Mid-Feb Saudi Yanbu National Petrochemical Co 1,300,000 Q1 800,000 April Al Jubail, Eastern Petrochemical Co (Sharq) 1,300,000 Q2 1,300,000 Q3 450,000 Aug Dushanzi Petrochemical 1,000,000 Q3 Sinopec-Sabic JV 1,000,000 Q4 Zhenhai Refining and Chemical Co 1,000,000 Dec
Rabigh Refining and Petrochemical Co
Saudi Yanbu National Petrochemical Co
Eastern Petrochemical Co (Sharq)
Zhenhai Refining and Chemical Co
($1 = €0.77)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|