FocusLighter Asia cracker '11 turnaround schedule to ease C2 supply

12 November 2010 06:10  [Source: ICIS news]

By Peh Soo Hwee

an ethylene plantSINGAPORE (ICIS)--Asia will have fewer cracker turnarounds next year based on preliminary schedule, potentially easing the tight supply that plagued the ethylene (C2) market for the most part of 2010, industry sources said on Friday.

Nineteen crackers were slated for turnarounds in 2011 compared with 30 this year, according to data obtained by ICIS. This translates to a production loss of more than 1m tonnes of ethylene next year.

The turnaround season would start in February, with majority of the shutdowns in Japan and South Korea concentrated in March, April and May.

“Supply in the first half of next year will be tighter and some of the Korean producers such as KPIC (Korea Petrochemical Industry Co) and Samsung Total expect to import,” said an olefins trader.

KPIC is planning a 25-day shutdown at its 470,000 tonne/year cracker in Onsan, while Samsung Total would have a longer turnaround at its 850,000 tonne/year Daesan cracker from end-April to early June, market sources said.

Other notable turnarounds include LG Chem’s 760,000 tonne/year cracker and Yeochun NCC’s 857,000 tonne/year ethylene plant. (please see table below)

Market sources said that Asian ethylene prices, which are currently weak, may get support from a large number of shutdowns planned in the first half of the year, although this would be offset by increased supply from the Middle East – a key determinant of pricing movements in this region.

Ethylene spot prices this month in northeast (NE) Asia fell below the psychological support  level of $1,000/tonne (€720/tonne), dragged down by news of spot tenders from Abu Dhabi and Saudi Arabia.

The ethylene or steam cracker margin plummeted to $34/tonne NE (northeast) Asia in the week ending 5 November, versus $72/tonne in the previous week and $252/tonne in September, based on ICIS margins data.

It  remains to be seen if the situation would persist until the start of the next turnaround season in 2011.

The new crackers that had come on stream in the Middle East this year – including Saudi Kayan Petrochemical’s 1.5m tonne/year plant in Al Jubail, Saudi Arabia – were expected to ramp up production in the months ahead, market sources said.

Saudi Kayan is 35%-owned by petrochemical giant Saudi Basic Industries Corp (SABIC).

“There will be more supply from the Middle East from SABIC,” said a second olefins trader.

SABIC may export 100,000-200,000 tonnes of ethylene in 2011, a sharp increase from the estimated 50,000-70,000 tonnes shipped out of the country this year, market sources said. Exports were sharply reduced in 2010 mainly due to the start-up of new downstream facilities in Saudi Arabia. The producer had exported more than 300,000 tonnes of ethylene in 2009, they added.

Ethylene prices in Asia have generally outperformed market expectations for the most part of this year, boosted by a heavy turnaround schedule and unexpected prolonged outages such as the unplanned shutdown of Taiwanese producer Formosa Petrochemical Corp's 700,000 tonne/year No 1 naphtha cracker in Mailiao in early July.

Meanwhile, demand for naphtha - the main petrochemical feedstock for ethylene production in Asia – would strengthen if comparatively fewer crackers went off line for maintenance next year, said a Singapore-based trader.

“The integrated margins are good, so the crackers will run high. All the better it is for naphtha, with lighter maintenance,” another trader said.

The integrated PE margin – the spread between ethylene and derivatives -  held firm at $235/tonne in the week ending 5 November, ICIS data showed.

2011 Asia cracker turnaround schedule

Additional reporting by Felicia Loo

($1 = €0.72)

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By: Peh Soo Hwee
+65 6780 4359



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