01 April 2009 06:03 [Source: ICIS news]
By Peh Soo Hwee
SINGAPORE (ICIS news)--Cracker operators in Japan plan to crank up ethylene production this month in anticipation of a pick up in derivative polymer demand during the new fiscal year (April-March), producers and traders said on Wednesday.
Among those eyeing the above higher rates included Showa Denko K.K., Mitsui Chemicals, Sumitomo Chemical and Maruzen Petrochemical. The 80-90% target represents up to a 10 percentage point increase from March levels.
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Car sales worldwide had plummeted with the onset of the global economic downturn in late 2008 as consumers tightened their belts. This in turn had affected demand for petrochemicals such as co-polymer polypropylene, which is an important plastic for car parts.
But with the start of the new fiscal year in April, producers were hopeful that end-users will be enticed to increase output after having cleared their stocks last month, which will stimulate demand for polymers and encourage higher cracker rates.
“End-users like car producers had reduced stocks at the end of the financial year in March and after that, we expect that they will pick up operating rates at their factories,” said another producer.
Some cracker operators also planned to scale back on ethylene exports in April and May in line with an expected improvement in domestic derivative demand.
April loading cargoes of Japanese origin were earlier sold at around $600/tonne (€450/tonne) on an free on board (FOB) basis – comparatively lower than fixtures for cargoes of South Korean origin, which were concluded up to $640/tonne FOB Korea, according to data from global chemical market intelligence service ICIS pricing.
“The Japanese are reliant on domestic demand so when they have surplus, they just want to sell the cargoes and clear the stocks,” said an olefins trader. “But there should be less cargoes for May loading also because of some turnarounds.”
Mitsubishi Chemical Corporation is slated to take its 375,000 tonne/year No 1 cracker in Kashima off line in the first week of May for a near two-month long maintenance while its other 450,000 tonne/year facility in Mizushima is due for a shutdown from mid-May to early June, a company source said.
($1 = €0.75)
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