Indian exports to meet rising naphtha demand in Asia in 2005?

Triggered by the biggest crude rally in decades, naphtha prices scaled new highs in 2004, reaching levels of US$486 a ton in Tokyo and $51.30 a barrel in Singapore. Growing economies also put pressure on demand for petrochemicals. Rising feedstock prices and growing demand also kept petrochem prices on the boil. Cracker operators ran their units at full capacity to capture their fattest margins in at least 10 years. A robust global economy drives consumption and China’s petrochemical needs continue to grow; Asian naphtha demand should rise in 2005. But while margins to make petrochemicals are expected to stay strong, significant price falls are anticipated on naphtha in 2005, if crude weakens. Bigger naphtha volumes from India and an upswing in Indian exports could unwind prices by mid-2005. Extra supply will also arrive in a year when demand could be reduced by full shutdowns planned at 3 of the largest crackers in Asia; Formosa Petrochemical Corp. in Taiwan, ExxonMobil Corp’s cracker in Singapore and a third unit at Rayong Olefins in Thailand. Maintenance at Hyundai Petrochemical’s 600,000 tpa cracker should also cut naphtha imports into South Korea (Asia’s second-largest market).
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