Naphtha prices have plunged by over hundred dollars in a couple of weeks. From record highs of US$$1245/ton on July 4, naphtha is now trading below US$1100/ton CFR Japan. With this fall in naphtha prices, the Asian ethylene producers, who have been running their plants at reduced rates are mulling an output hike shortly. Record high crude and naphtha values witnessed earlier this year, had coerced few producers to cutback on cracker operating rates by almost 20%.
Ethylene prices currently continue to hover around US$1625/MT. If ethylene prices sustain around the US$1500/MT mark, increasing production rates seems a healthy option. Few ethylene majors are of the opinion that increasing capacity may not be the best option, as ethylene prices have also weakened in line with the fall in naphtha values.
In Southeast Asia, some producers place the break-even spread between naphtha and ethylene at around US$400/ton, but subject to cracker efficiency. Thailand's Rayong Olefins, Petrochemical Corp of Singapore (PCS) and Taiwan's Chinese Petroleum Corp (CPC) are considering a capacity hike.
PCS shut its 475,000 tpar No 1 cracker for maintenance mid-July, and is operating the No 2 cracker with 615,000 tpa capacity at a reduced rate of 80-85%. CPC has planned a 6 week maintenance shutdown at its largest cracker in Kaohsiung with 500,000 tpa capacity in mid-August.