Ethylene market in Asia shows signs of rebound on demand from South East Asia

Asian ethylene started to show signs of rebound, on gradual return of end-users in Southeast Asian market, as per Platts. CFR Northeast Asia price benchmark fell by US$44/mt last week to be assessed at US$1096/mt, while CFR Southeast Asia price fell US$60/mt over the same period to US$1081/mt. On Wednesday, CFR SEA price rose by US$18/mt day on day to be assessed at US$1099/mt, while the CFR NEA price again remained flat at US$1096/mt. Some end-users in SE Asia are gradually returning to the market, with some seeking spot cargoes for late July arrival to cover the production shortfall of Shell Chemicals' steam cracker shutdown in August. In August, Shell Chemicals plans to shut for a one month maintenance turnaround, its 800,000 tpa naphtha-fed steam cracker at Pulau Bukom, Singapore. This shutdown is estimated to prompt 40,000-50,000 mt of spot ethylene demand in SEA. While the CFR NEA price remained flat from Tuesday, market sources said a price rebound was likely soon as China is approaching steam cracker turnaround season that kicks off in August. China's Shanghai Secco Petrochemical plans to shut its 1.1 mln tpa naphtha-fed steam cracker in Shanghai from early August for one month of annual maintenance. This could result in end users returning to the market. But the rebound in the Asian ethylene market was seen to be limited due to weak ethylene derivatives prices as well as persisting supply from the Middle East, notably from Iran. Also, among ethylene derivatives, the Asian PVC market was particularly weak. Under the impact from deep-sea supplies from USA and Europe, CFR China PVC price dropped by US$53/mt week on week, to be assessed at US$1146/mt. Polyethylene margins have been positive since June 10 but it is not good enough to prompt strong spot buying currently. At current ethylene and PE prices, PE producers can generate profits of US$65/mt.
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