08 March 2012 04:00 [Source: ICIS news]
By Peh Soo Hwee
Ethylene margins based on naphtha feed in northeast
The margins tumbled by $74/tonne (€56/tonne) to their lowest levels since early December at minus $17/tonne, partly because of the surge in naphtha prices and a decline in butadiene prices
Cracker margins in southeast Asia similarly fell by $81/tonne to $26/tonne.
“There is no move to cut rates for now but our margins are getting narrower and narrower,” said a producer in
Cracker operators in
The CFR (cost & freight) Japan naphtha quote hit a 45-month high on 2 March to be assessed at $1,166.00-1,167.00/tonne, but prices have since pulled back as on news that almost one million tonnes of deep-sea cargoes from the West will reach Asian shores this month.
However, from the cracker operators' perspective, feedstock naphtha prices are still extremely high, as prices in the downstream olefins markets are unable to keep pace with the upward trend of naphtha.
The CFR Japan naphtha quote was assessed at $1,092.50-1,095.50/tonne on 8 March, up $10.50-11.50/tonne from the previous day.
Traders said the spike in raw material costs is more keenly felt in
“The dollar per tonne cost is much cheaper in
The run rates in
In southeast Asia, crackers are generally running at 90-95% capacity.
Sinopec said on Tuesday that the operating rate at its naphtha crackers was reduced to 90-95% this month from an average rate of close to 100% in February. Sinopec operates 16 crackers either on its own or through joint ventures.
Cracker margins in
But the recent decline in these markets because of weak derivative demand has put the heat on producers to review their ethylene plant operating rates, industry sources said.
The earlier spike in olefins prices had taken a toll on demand from downstream sectors ranging from polymers to synthetic rubbers (SR) as the pricing of such products has not kept pace with the jump in feedstock values.
Several downstream SR producers in
Market sources said lingering concerns over the Eurozone debt crisis continue to affect demand for petrochemicals, which are used as feedstock to produce finished goods ranging from textiles to cars and toys.
Exports from Asia tend to head to key markets such as Europe and the
“Demand is really slow and everyone is in a difficult situation,” said the Japanese trader.
Additional reporting by Quintella Koh
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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