Focus article by Yeow Pei Lin
SINGAPORE (ICIS)--Spot ethylene import prices in northeast Asia slumped to a 26-week low amid plentiful June- and July-delivery cargoes.
Deals were concluded at $980-1,040/tonne CFR (cost and freight) NE (northeast) Asia for June-delivery cargoes during the week, lower than the $1,060-1,110/tonne CFR NE Asia range in the previous week ended 19 May.
Prices were dragged down by fresh spot supplies in southeast Asia and a strong inflow of cargoes from the Middle East, the US and Europe to Asia between the second half of May and the first half of July.
“Buyers in China are largely covered for June. It is difficult to find a home for producers with cargoes to load next month,” a trader said.
A southeast Asian producer offered around 10,000 tonnes for June loading, after selling a similar quantity in recent weeks. Separately, a second southeast Asian producer made a spot deal this week for a 5,000-tonne early-June shipment.
The strong exports from southeast Asia came on the back of downstream plant shutdowns at integrated complexes, a weak polyethylene (PE) market and the completion of a turnaround at ExxonMobil’s Singapore cracker, which has a 1m tonne/year ethylene capacity.
Further, at least 40,000-42,000 tonnes of ethylene from the US and Europe will be delivered to China and Taiwan during June to the first half of July. The supply – largely on a term basis -- will reduce the outlets for spot cargoes at a time of rising regional production and increased exports from the Middle East.
Cracker expansions in India and South Korea will boost exports from the two countries from the end of June or July. Korea Petrochemical Industry Co (KPIC) is on track to restart on 1 June its 470,000 tonne/year cracker, which is undergoing a 330,000 tonnes/year expansion.
Supplies from the Middle East are also on the rise, after the completion of several cracker turnarounds in May and due to downstream production issues.
On a more upbeat note, downstream margins have improved in line with the recent large declines in ethylene costs.
“Downstream operations should be generally healthy. We plan to increase our plant operations next month,” said a Chinese vinyls maker.