10 February 2011 04:33 [Source: ICIS news]
By Peh Soo Hwee
At least 22 crackers are slated to be shut in 2011 for maintenance (refer to table below), with more than half of the turnarounds occurring in the first half of the year, according to data from ICIS.
“We see the upside potential for ethylene due to relatively tight supply in the region,” said a Japan-based olefins trader.
“I also do not see any spot cargoes from the
Offers for ethylene this week increased to around $1,350/tonne (€986/tonne) CFR (cost and freight) NE Asia - about 6% higher than the last assessed prices in late January, with one deal done at $1,320/tonne CFR Korea for March arrival, market sources said.
In end-January, spot prices of ethylene were at an eight-month high of $1,260-1,290/tonne CFR (cost and freight) northeast (NE) Asia, while propylene was at $1,370-1,380/tonne CFR NE Asia – a level not seen in more than two years, according to ICIS data.
The key Chinese market was closed on 2-8 February for the Lunar New Year holidays, which significantly slowed down trades last week.
Meanwhile, ethylene prices in southeast Asia could soon close the gap with levels in the northeast amid talks of cutbacks/delays in the delivery of term cargoes from
Ras Laffan Olefins’ 1.3m tonne/year cracker in
“Prices in southeast Asia are likely to move up as buyers are affected by the delays,” said a Singapore-based trader.
In end-January, prices of ethylene in southeast
Offers/selling ideas for end-February/March arrival parcels were at above $1,300/tonne CFR SE Asia this week, while buying ideas hovered in the mid- to high- $1,200/tonne CFR SE Asia levels, market sources said.
As for propylene, traders were targeting to sell spot cargoes for late February/early March arrival at least in the low- to mid-$1,400/tonne CFR NE Asia.
But buying sentiment in the key
Higher interest rates meant an increase in borrowing costs for businesses, which could hurt their earnings.
“The market has been rather sluggish. Buyers don’t seem interested above $1,400/tonne CFR China,” said another Japan-based trader.
Separately, a Taiwanese polypropylene (PP) producer said the sharp spike in feedstock propylene costs was expected to exert further pressure on its margins.
“We are not making money if propylene crosses the $1,400/tonne level,” he said in Mandarin.
PP yarn spot prices were hovering above $1,500/tonne CFR China this week, while a typical spread of $150/tonne with propylene is usually needed for producers to break even.
Updated Asia cracker turnaround schedule in 2011
($1 = €0.73)
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