FocusUpside for Asia olefins limited on fewer turnarounds, economy

25 November 2011 03:33  [Source: ICIS news]

By Peh Soo Hwee

SINGAPORE (ICIS)--The gains in Asia’s olefins market may be capped next year because of a lighter 2012 cracker turnaround schedule and concerns over the health of the global economy, market sources said on Friday.

Around 16 crackers in the region are scheduled for maintenance in 2012 compared to 33 crackers in 2011. (please see table below)

Based on the nameplate capacities of these crackers, the ethylene production loss is estimated to be at least 865,534 tonnes in 2012, down by more than 50% from levels seen in 2011, according to ICIS.

The market outlook for the ethylene and propylene markets in 2012 is generally bearish, particularly in the first quarter as the Lunar New Year holidays will arrive earlier on 23 January 2012, market sources said.

“January business is basically dead. Hopefully demand will pick up in February for March cargoes,” a regional olefins trader said.

“At the moment, we do not see the demand for olefins really picking up amid the uncertainty in the downstream sectors and about the economy,” the trader added.

With the exception of South Korea, crackers in Asia are being operated at reduced rates of 80-90% this month as producers are squeezed by high feedstock naphtha costs and the earlier sharp falls in olefins prices.

South Korean producers are still running their crackers at close to full tilt except for SK Energy, which is operating its 190,000 tonne/year No 1 cracker in Ulsan at 70% capacity this month.

Ethylene margins of producers in northeast Asia based on naphtha feed fell into negative territory at the end of October, but the losses have narrowed in recent weeks partly because of a modest recovery in ethylene, propylene and butadiene (BD) prices, according to ICIS data.

Ethylene daily prices rose $10/tonne (€7.50/tonne) to $1,030-1,070/tonne CFR (cost & freight) NE (northeast) Asia on 24 November, while propylene prices softened by $10/tonne to $1,300-1,320/tonne CFR NE Asia.

Naphtha spot prices were hovering at above $860/tonne CFR Japan during the same period.

Cracker operators typically need at least a $250/tonne spread between naphtha and ethylene prices to break even.

However, the recovery in the olefins markets remains fragile as end-users prefer to keep minimal inventories, particularly as it is typically a lull production season for the petrochemical industry towards the end of the year.

“We are very prudent when it comes to buying ethylene and propylene and will purchase only for immediate needs, said a buyer based in Taiwan that is handling feedstock purchasing for the company’s downstream polypropylene (PP) and ethyl acetate (etac) facilities.

As such, the verdict on whether crackers in the region can return to full production has not been determined, market sources said.

“The [naphtha] market will be bearish if the overall cracker runs are as low as now despite having less cracker turnarounds,” a naphtha trader based in Singapore said. “However, if the utilisation rates improve, the market will be positive,” the trader added.

Asia 2012 Cracker Turnaround Table:

Month	Company Name	Location	Capacity (t)	Turnaround dates
Jan
Feb	PTT Chemical	Map Ta Phut, Thailand	400,000	around 40 days
	Indian Oil Corp	Panipat, India	857,000	around 1 month
Mar	Asahi Kasei	Mizushima, Japan	500,000	around 1 month
	YNCC	Yeosu, South Korea	578,000	5 Mar to 4 Apr
	Tosoh Corp	Yokkaichi, Japan	527,000	40 days
Apr	* Honam Petrochemical	Yeosu, South Korea	750,000	10 Apr for 40 days
May	Mitsubishi Chemical	Kashima, Japan	375,000	1 month (TBC)
	Maruzen Petrochemical	Chiba, Japan	520,000	40 days
June	Mitsui Chemicals	Osaka, Japan	450,000	end-Jun to end-Jul
Jul	Tianjin Petchem	Tianjin, China	1,000,000	sometime in Q3 (TBC)
	Yangzi Petrochemical	Nanjing, China	650,000	1 month (TBC)
Aug	JX  Nippon Oil & Energy	Kawaski, Japan	460,000	12 Aug to 1 Oct
	Mitsubishi Chemical	Kashima, Japan	453,000	1 month (TBC)
Sep	Idemitsu Kosan	Tokuyama, Japan	623,000	early Sep to end Oct
	Formosa Petrochemical Corp	Mailiao, Taiwan	700,000	40-45 days
Oct
Nov
Dec
	Shanghai Petrochemical	Jinshan, China	300,000	TBC
* Capacity expansion at existing cracker to 1m tonnes/year
Source: ICIS

($1 = €0.75)

Additional reporting by Felicia Loo

For more on naphtha and olefins, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
For more pricing intelligence, visit ICIS pricing
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Peh Soo Hwee
+65 6780 4359

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