NE Asia ethylene market under pressure from ample supply

SINGAPORE (ICIS)–Spot ethylene prices in northeast Asia may remain under downward pressure despite the outage at Shell’s Singapore cracker, given ample regional supply and expectations of higher exports from the Middle East, market players said on Thursday.

At midday, ethylene prices stood at $1,000-1,050/tonne CFR (cost and freight) NE (northeast) Asia, stable from the previous day, according to ICIS data.

Discussions were heard ongoing for a 3,500-tonne cargo for first-half November loading at around $1,030/tonne FOB (free on board) SE (southeast) Asia.

On 30 September, spot ethylene prices were assessed at $1,020-1,050/tonne CFR NE Asia, down $50-75/tonne from the previous week, ICIS data showed.  

Prices have plunged by around 13% over the month of September amid uncertain downstream demand and expectations that tight supply would ease.

The shutdown of Shell’s cracker with a 960,000 tonne/year ethylene capacity in Singapore last week failed to nudge up prices, as northeast Asia is awash with deep-sea supply and as some regional crackers just resumed production from turnarounds.

Ethylene exports from the Middle East are expected to grow in the fourth quarter, with a Saudi Arabian producer planning to sell spot material for October and November delivery on top of its regular term supply, market sources said.

Meanwhile, Taiwanese cracker operators may ship out more material ahead of the expected closure of a major ethylene pipeline in Kaohsiung late this year, they said.

Northeast Asia buyers were generally in no hurry to secure cargoes partly on account of ample spot deep-sea lots available in the market.

Moreover, the turnaround of other northeast Asian crackers was slated to be completed in end-October, just in time for the expected stable operations of new downstream plants.

In Japan, Idemitsu Kosan’s cracker in Tokuyama is undergoing a 45-day maintenance from 10 September, while in South Korea, SK Global Chemical’s Ulsan cracker was taken off line on 17 September and is due to restart by the end of the month.

In China’s downstream market, Qingdao Haijing is expected to achieve commercial production at its vinyls complex in Shandong province around end-October or November, according to a company official.

The complex has a 400,000 tonne/year vinyl chloride monomer (VCM) plant and a polyvinyl chloride (PVC) unit with the same capacity. Trial runs are ongoing at the VCM unit.

In Jiangsu province, Abel Chemical expects to start trial operations at its 250,000 tonne/year styrene monomer (SM) plant this month, after China’s week-long National Day celebration (1-7 October).

Focus article by Helen Lee

Picture: Containers and container ships at Singapore port (Photographer: Charles Pertwee/REX/Shutterstock)

Read John Richardson’s Asian Chemical Connections blog