08 June 2010 05:00 [Source: ICIS news]
By Peh Soo Hwee
SHANGHAI (ICIS news)--Naphtha cracker operators in Asia may start trimming plant operating rates in the second half of the year if the correction in ethylene prices continues, market participants said on Tuesday.
Ethylene hit a fresh seven-month low of $930-1,000/tonne (€781-840/tonne) CFR (cost and freight) northeast Asia last week, dragged down by ample supply from the ?xml:namespace>
“Currently the ethylene balance is tight in
Eight crackers in
In southeast Asia, Chandra Asri – the sole cracker operator in
Naphtha crackers in
Ethylene margins slumped 38.7% or $134/tonne to $212/tonne in northeast
"It looks like conditions will be more difficult going forward especially from the economic point of view," said an olefins trader based in Shanghai, referring to concerns that the debt crisis in Europe and measures by the Chinese government to tighten credit lending in the country would hurt consumer demand and affect the petrochemical industry, which provides the raw materials for manufacturing end-products such as textiles and shoes for export.
Amid the current bearish market conditions, talks to export one to two June loading ethylene cargoes from
“With naphtha at more than $650/tonne, we are making losses selling ethylene below $900/tonne,” said a producer in the country, adding that its selling target was $950-1,000/tonne FOB (free on board) China.
On a positive note, derivative markets such as styrene monomer (SM) and polyethylene (PE) that had borne the brunt of the spike in ethylene values earlier in the year were getting some respite from the sharp correction.
“Now our derivative margins seem ok because C2 dropped so much,” said the source from Chandri Asri.
“Maybe we will consider restarting our SM (styrene monomer) train,” he said, adding that the company had shut a 100,000 tonne/year line since April due to poor economics.
Standalone high density PE margins in northeast
($1 = €0.84)
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