03 March 2009 05:55 [Source: ICIS news]
(Recasts, clarifying 2009 ethylene capacity figure in eighth paragraph)
By Bohan Loh
SINGAPORE (ICIS news)--Asian ethylene may not get much boost as the likely delay in restarting Formosa Petrochemical Corp’s 700,000 tonne/year cracker in Mailiao following Monday’s blast will not create a supply shortage, petrochemical analysts polled by ICIS news said on Tuesday.
The Taiwanese producer was supposed to restart its No 1 cracker this week as its 1.2m tonnes/year No 3 cracker will have to be shut on mechanical problems on 7-8 March.
“There is still no real demand for petrochemicals. Since they are going to run No 3 indefinitely now, there should not be much of an impact to ethylene prices,” said Samuel Lee, a petrochemical analyst at London-based bank HSBC.
FPCC’s No 1 cracker was taken off line in early January in a bid to reduce excess supplies in the face of weak demand.
Lee said he expects ethylene prices to be flat or slightly lower next week due to falling downstream polyolefin values.
“700,000 tonnes/year is less than 1% of the global capacity for 2009 and is 17.5% of excess supply,” said Sutthichai Kumworachai, an analyst with brokerage KGI Securities.
Global capacity for ethylene in 2009 is more than 132m tonnes, according to data from ICIS pricing.
“People are very concerned about the near-term weakening demand,” Kumworachai said, adding that ?xml:namespace>
“The spread of ethylene has been very narrow. Olefins are generally the most vulnerable products to down-cycles,” Kumworachai said.
The current naphtha-ethylene spreads have already weakened 20% from last week’s $187/tonne (€148/tonne), he added. Naphtha is the feedstock for producing ethylene.
Buyers would likely resist higher prices for ethylene given new capacities coming up in the
Ethylene spot prices fell to a one-month low of around $630-650/tonne CFR (cost and freight) northeast (NE) Asia last week as softening derivative markets capped demand for the monomer, according to global chemical intelligence service, ICIS pricing.
Traders said the end-users had retreated to the sidelines as they were already covered for March, but prevailing high naphtha feedstock costs could make it attractive for producers to buy ethylene.
($1 = €0.80)
With additional reporting by Peh Soo Hwee
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