21 June 2012 05:02 [Source: ICIS news]
By Peh Soo Hwee
Spot prices fell to levels not seen since August 2010 and were assessed at $890-930/tonne (€703-735/tonne) CFR (cost and freight) northeast (NE) Asia and at $920-950/tonne CFR southeast (SE) Asia during the week ended 15 June, according to data from ICIS.
“The ethylene market could be almost at the bottom because below $900/tonne CFR NE Asia is too low for cracker operators and there are no (profit) margins,” said a South Korean producer.
Ethylene margins based on naphtha feed in northeast
Naphtha cracker operators in
The consecutive decline in ethylene prices over the past nine weeks came partly on the back of a poor performance in key derivative markets such as polyethylene (PE), which had encouraged producers in Asia and the
The amply supply in turn exerted downward pressure on ethylene spot prices in
However, the prolonged ethylene price correction and declines in co-products such as propylene led producers to cut cracker operating rates in Asia mainly to 80-90% this month, with the exception of some plants in South Korea that continue to run at full rates.
Propylene spot prices were at a six-month low of $1,210-1,270/tonne CFR NE Asia during the week ended 15 June.
Because of the production cutbacks, some market participants said it was increasingly difficult to source for cheap ethylene in the region.
“Some of the end-users are seeking ethylene at or below $900/tonne CFR NE Asia but traders are not willing to sell so low and looking at $940-950/tonne CFR NE Asia,” an olefins trader based in China said.
However, some industry sources ruled out further cracker rate cuts in
Traders said market sentiment would likely be ruled by the movement of naphtha and crude futures, which have been volatile.
“If crude does not stabilise, we cannot rule out further declines as derivative demand remains weak,” said another ethylene producer based in
At noon, August WTI was down by 94 cents to $80.51/bbl, while August Brent was down 22 cents to $92.47/bbl in
Crude futures extended losses in early Asian trade on Thursday after weekly supply statistics from the Energy Information Administration (EIA) showed a build in US crude and refined products inventories
Ethylene spot prices were stable at $890-930/tonne CFR NE Asia on Thursday morning.
“Now that crude has declined sharply overnight, it is hard to say where we will go as naphtha is likely to weaken,” said a Japan-based olefins trader.
($1 = €0.79)
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections