26 February 2010 10:51 [Source: ICIS news]
By Pearl Bantillo
The petrochemical giant said commissioning works to start up the cracker in Pulau Bukom have begun after major construction activities at the plant were completed.
The cracker, scheduled to start up within the first quarter, is the second plant to be built at the ?xml:namespace>
The first plant was a world-scale 750,000 tonne/year monoethylene glycol (MEG) unit located in Jurong island that was officially inaugurated on 11 December 2009.
“Shell had to buy ethylene to feed the secondary unit before this cracker started. The buying had supported the [naphtha] market,” said a naphtha trader.
“Now with the start-up, it shall impact the ethylene market first which will ultimately impact naphtha. It will shake up the petrochemical market a bit,” the trader said.
With Shell soon to produce its own ethylene for the downstream MEG unit, significant volumes of ethylene would be freed up, which could weigh down on spot prices, market players said.
Ethylene prices started to weaken even before news of the cracker’s commissioning came out, as buying interest has been thin for March cargoes, traders said.
“March is already over because tanks are quite full. What happens after that will depend very much on how much exports are coming out from the
In southeast Asia, ethylene prices fell below the $1,300/tonne (€962/tonne) CFR (cost and freight) level this week on the back of availability from the
A deal was heard concluded on Monday at $1,280/tonne CFR SE Asia for arrival before mid March, but another fixture surfaced on Friday at around $1,200/tonne CFR SE Asia for arrival in early April, market sources said.
Meanwhile, the impact on the Asian naphtha market was more difficult to ascertain as the
Based on the cracker’s size, it would require about 2.4m tonnes/year of naphtha, traders said.
But the cracker was designed to have flexibility in the use of feedstocks, which includes hydrowax, said a Shell spokesperson.
According to an industry source, Shell may even venture to crack low waxy sulphur residue (LWSR), which is derived from refining lighter Asian low sulphur crude.
“Such feed flexibility will insulate them … somewhat should it [naphtha] become more expensive [than other feeds] from a yields standpoint,” the source said.
With additional reporting by Peh Soo Hwee and Felicia Loo
($1 = €0.74)
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