18 January 2010 03:42 [Source: ICIS news]
By John Richardson
SINGAPORE (ICIS news)--Asian naphtha supply is going to remain tight into March and April as a result of high cracker operating rates and low refinery capacity utilisation, N Ravivenkatesh, Singapore-based consultant with Purvin & Gertz said on Monday.
“Olefins demand remains strong as cracker operators build up inventory ahead of the turnaround season. Asian crackers continue to operate at close to maximum capacity,” he said.
Simple and complex refinery margins remained weak in both Asia and ?xml:namespace>
“Global middle distillate inventories are high and gasoline consumption is still poor,” he said.
Refinery maintenance work in the Middle East is also expected to reduce naphtha availability for
Asia is likely to see less naphtha exports from
Looking further out, Ravivenkatesh said: “We expect the East of Suez naphtha market to be net short of about 550,000 tonnes in March and 800,000 tonnes in April,”
Tight naphtha availability accompanied by rising prices has the potential to put a strain on crackers margins.
However, the ICIS Asian Weekly Ethylene Margin Report for 15 January showed a 21.5% increase in margins for Northeast Asia and a 34.6% increase for
Ethylene pricing has also been buoyed by its own tight supply – the result of start-ups of derivative units in
Shell commissioned its 750,000 tonne/year monoethylene glycol (MEG) plant in
A 1m tonne/year associated ethane cracker - due to start-up around a week later – will now only be commissioned on 26 January, said ICIS news.
A further plus for the cracker operators are greater alternative feedstock options.
“With the strong naphtha market and the weaker middle distillate market, kerosene gas oil and heavy atmospheric gas oil cracking has turned attractive,” said Ravivenkatesh.
“And when the northern hemisphere winter comes to an end, we forecast that liquefied petroleum gas (LPG) demand will be weak, making cracking LPG attractive in March and April.”
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