JAPAN DISASTER: March olefin shipments cancelled on shut crackers

17 March 2011 08:46  [Source: ICIS news]

Japan quake, tsunami aftermathBy Peh Soo Hwee

SINGAPORE (ICIS)--Olefins shipments from Japan this month have been cancelled as some naphtha crackers in the country remain shut about a week after a massive earthquake and tsunami hit the northern part of the country, market sources said on Thursday.

At least 15,000 tonnes of propylene cargoes and around 10,000 tonnes of ethylene shipments were affected, traders estimated.

Mitsubishi Chemical’s two crackers in Kashima, along with Maruzen Petrochemicals’ 520,000 tonne/year ethylene plant in Chiba, remain off line.

JX Nippon Oil and Energy’s 460,000 tonne/year cracker and an olefins conversion unit (OCU), which can produce 140,000 tonnes/year of propylene, in Kawasaki are still shut, market sources said.

“We have no idea when the crackers will restart,” said a company source from Mitsubishi Chemical.

Traders said it might take a longer time for Mitsubishi’s two crackers, which have a combined ethylene capacity of more than 800,000 tonnes/year, to resume operations as infrastructure at the site was badly damaged.

Keiyo Ethylene’s 740,000 tonne/year cracker in Chiba and Tonen’s 515,000 tonne/year plant in Kawasaki were running at reduced rates of 70-80%, partly due to power shortages at derivative plants, sources said.

On the other hand, Mitsui Chemicals has increased the operating rate at its 617,000 tonne/year cracker in Chiba to close to 100% after earlier reducing output in the wake of the disaster, a company source said.

Maruzen, Showa Denko and Tonen are regular exporters of ethylene.

As for propylene, key exporter JX Nippon Oil and Energy’s fluid catalytic cracker (FCC) at Sendai, which can produce 100,000 tonnes/year of propylene, was damaged in a fire at the 145,000 bbl/day refinery in the hard-hit Miyagi prefecture.

JX Nippon Oil’s 270,000 bbl/day refinery in Negishi, however, was now expected to resume operations next week, said another company source.

Japan exported around 480,000 tonnes of ethylene and 700,000 tonnes of propylene in 2010, according to estimates from traders.

Spot discussions were thin during the week as market participants stayed on the sidelines to assess the impact from the 9.0-magnitude earthquake and tsunami that struck Japan on 11 March.

Buying interest remained thin for ethylene as ongoing and upcoming derivative plant turnarounds in the leading Chinese market capped demand for spot cargoes.

Ethylene spot prices were mainly stable at around $1,300/tonne (€936/tonne) CFR (cost and freight) northeast (NE) Asia, market sources said.

For propylene, selling ideas were raised at above $1,600/tonne CFR NE Asia for end-March/early April arrival cargoes, but competitively-priced domestic material in China and prevailing high prices saw buying ideas capped at $1,550/tonne CFR NE Asia.

Below is the operating status of the crackers in Japan as of 17 March

Status of Japan crackers as of 17 March

Click here for the latest news on the Japan disaster

By: Peh Soo Hwee
+65 6780 4359

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