27 May 2011 09:33 [Source: ICIS news]
By Felicia Loo
A possible prolonged shutdown at a cracker in
The intermonth naphtha spread between the first-half July and first-half August contracts was assessed at a backwardation of $3.50/tonne (€2.50/tonne) - the weakest since 21 February, according to ICIS data. Naphtha prices were at $983.50-986.50/tonne CFR (cost and freight)
Reflecting the bearish market, South Korean’s Yeochun NCC (YNCC) has bought 50,000 tonnes of spot naphtha a very weak premium of $1.50/tonne to Japan quotes CFR for delivery into Yeosu in the first half of July.
“Demand is decreasing and the outlook is bearish,” said a naphtha trader.
Meanwhile, Asian SM prices slipped below $1,400/tonne CFR China this week amid poor downstream styrenic resins demand. SM buyers were hesitant to commit as they expect spot prices to fall further.
High density PE (HDPE) spot prices have weakened by $10/tonne to below $1,350/tonne CFR China, on the back of sluggish downstream demand and softer leading domestic prices. Buyers opted to monitor the market this week, while waiting for more offers to emerge next week. However, they reiterated that purchases would be limited to small lots.
Ethylene prices slipped lower to $1,250-1,270/tonne CFR NE Asia on Friday, reflecting the latest deal in the spot market, with a Taiwanese buyer forking out $1,250/tonne CFR NE Asia for a 3,500-4,000 tonne lot for delivery in mid-June, players said. On 20 May, ethylene prices were at $1,320-1,350/tonne CFR NE Asia, ICIS data showed.
“There is plenty of ethylene supply in the region, especially with crackers returning from maintenance,” said one trader.
Idemitsu Kosan is running its 374,000 tonne/year naphtha cracker in
Korea Petrochemical Industry Co (KPIC) has restarted its 470,000 tonne/year cracker at Onsan on 23 May and is currently running the unit at full tilt. The company also resumed production at its downstream high-density polyethylene (HDPE) facility, and operating rates at all lines are currently at 80% or higher.
The KPIC cracker was shut on 18 May because of technical problems, curtailing the supply of ethylene to the HDPE plant.
“Now that Shell is back on track, spot ethylene demand will weaken further,” another trader said.
A Shell spokesperson said that the process of restarting the cracker began in the middle of May. The company will monitor the performance of the cracker to determine whether the force majeure on ethylene and mono-ethylene glycol shipments can be lifted. Technical problems shut the cracker on 18 March and had remained down for nearly two months.
Market sources had said earlier that the cracker's shutdown would likely last a month.
A fire broke out at the
Some of the affected plants, including FPCC's 260,000 tonne/year acrylonitrile (ACN) plant and Formosa Plastics Corp's (FPC) 500,000 tonne/year polyvinyl chloride (PVC) unit, have since been restarted.
A slate of naphtha tenders recorded lower premiums because of weak regional demand for the petrochemical feedstock.
Indian refiner Oil and Natural Gas Corp (ONGC) sold by tender 35,000 tonnes of naphtha for loading from Mumbai on 10-11 June to Total, at a premium of $19/tonne to Middle East quotes FOB.
ONGC also sold via a separate tender 35,000 tonnes of naphtha to Itochu at a premium of $20/tonne to
“It’s very difficult to find buyers these days and this trend is expected to last for the next two to three months,” said a petrochemical player.
($1 = €0.71)
Additional reporting by Clive Ong and Ong Sheau Ling
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