NE Asia ethylene prices steady amid healthy demand

Yeow Pei Lin

21-Oct-2016

Focus article by Yeow Pei Lin

SINGAPORE (ICIS)–Northeast Asia’s ethylene import prices are broadly stable as the impact of rising regional supply is counterbalanced by healthy demand from the key China market.

Three second-half November arrival cargoes were traded this week into China at $1,055-1,070/tonne CFR (cost and freight) NE (northeast) Asia. These are close to the ICIS-assessed prices for the week ended 14 October at $1,050-1,075/tonne CFR NE Asia.

Spot requirements for November-arrival cargoes to China have been healthy and a similar picture is emerging for December-delivery shipments as well.

Some Chinese end-users are intending to stockpile ahead of the 2017 term import discussions and the Lunar New Year holiday.

Buying activity is also driven by the strong performance of certain derivative sectors and a broadly stable ethylene price outlook for November and December, according to Chinese sources.

“We are worried that prices in January may go up. The Taiwanese will need to stock up before CPC’s cracker turnaround in February,” a Chinese buyer said.

CPC Corp will shut its No 6 cracker in Linyuan during February to April 2017 for maintenance. The cracker has a 720,000 tonne/year ethylene capacity.

The Chinese buyers see limited pricing risks for forward purchases on expectations that the regional demand and supply will be relatively balanced until the end of the year. Prices, they said, are unlikely to see significant fluctuations.

So far, buyers have had no difficulty fulfilling their requirements for November-arrival cargoes. The regional supply is lifted by higher production rates after summer and as the cracker turnaround season in northeast Asia draws to a close.

Further, shipments from South Korea and Taiwan in the fourth quarter will be boosted by reduced domestic consumption.

South Korean producer Yeochun NCC (YNCC) is increasing ethylene exports in October and November on the back of a number of turnarounds at its affiliates’ downstream plants during those two months. It is understood that most of the supplies will be put into the producer’s term export contract with a regional trader.

Taiwan’s supplies will likely go up in the second half of November and December, when downstream production activity in Kaohsiung slows down due to the closure of a major ethylene pipeline.

CPC Corp is shutting its pipeline from around 25 or 26 November 2016 until 12 January 2017 as the infrastructure has to be relocated to make way for underground rail lines.

Meanwhile, some Chinese end-users are seeking cargoes to maintain or raise their production as the current ethylene spot prices are workable for them.

Vinyls is the best performing downstream sector so far. The Asian polyvinyl chloride (PVC) market is drawing support from higher post-monsoon Indian demand and tight Chinese domestic supply on the back of environmental inspections in Shandong.

“Our spot demand is higher than expected in November because we are raising our plant run rates,” a vinyls maker in China said.

Ethylene CFR NE Asia 21 October 2016

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