The spread between ethylene and naphtha narrowed by US$26.50/mt day on day to the lowest level in nine months at US$583.63/mt Tuesday, amid plunging ethylene prices due to an influx of deepsea cargoes, as per S&P Global Platts. According to Platts data, the CFR Northeast Asia ethylene price marker fell US$15/mt day on day to be assessed at US$1035/mt on Tuesday, the lowest since March 3 this year when it was assessed at US$1015/mt. CFR Japan naphtha price rose US$11.50/mt day on day to be assessed at US$451.38/mt. On Tuesday, film-grade high density polyethylene was assessed up US$5/mt day on day at US$1170/mt CFR Far East Asia, the highest in seven months.
The Asian ethylene market has been under pressure due to the continuing influx of deepsea cargoes from Europe and the Middle East. This week, 3,000-6,000 mt of spot ethylene was reported to have been offered for early December arrival in China. An Iran-origin cargo of 3,000-5,000 mt was also offered to China for the same laycan.
Local ethylene supplies are expected to rise after the steam cracker maintenance season ended late October. Additional supplies are available in Taiwan due to maintenance work on an ethylene pipeline from November to January. Meanwhile, Shell Singapore had begun the process to restart its naphtha-fed steam cracker in Pulau Bukom, market sources said. The cracker, which is able to produce 960,000 mt/year, was shut on September 27 due to a compressor problem. Some market sources said the recent decline in prices was inevitable as spot ethylene had been moving too high compared to naphtha feedstock.
Market sources said that despite a sharp decline in the Asian ethylene market, steam cracker operators in Asia were likely to continue to run their plants at full capacity due to positive spread between ethylene and naphtha.
Typically, Asian cracker operators need a $350/mt spread between ethylene and naphtha for breakeven.