New ethylene capacities come onstream in April-May

In first few days of May, the market has seen two major crackers coming onstream in Asia and the Middle East - Shell Chemicals’ 800,000 tpa ethylene cracker in Singapore followed by Ras Laffan Olefin Cracker in Qatar with a production capacity of 1.3 mln tpa of ethylene- the world’s largest ethane based cracker, as per Chemorbis. In April, several ethylene capacities came online : Sinopec Zhenhai’s 1 mln tpa ethylene cracker in China came onstream on April 20. However, the cracker encountered a problem after 8 days following the start-up, which was expected to last for a week. CNOOC-Shell (CSPC) expanded ethylene capacity from 800,000 tpa to 1 mln tpa with restart set for May 8 after delays in April. In the Middle East, Sharq Petrochemicals started commercial operations on April 1 of an ethylene cracker with 1.3 mln tpa capacity. Some major crackers are scheduled to come onstream in Iran: Morvarid Petrochemicals is to restart its cracker with 500,000 tons/year ethylene capacity. In April, Kavian Petrochemical Company was also heard to be conducting test runs at its Olefin No. 11 complex, which consists of two large olefin plants each with a capacity of 1,200,000 tpa. The company was said to be preparing for commercial runs at the new complex in May. All of these new capacities are expected to hit the ethylene markets in the medium term as well as the downstream polymer markets. Even though Asia is suffering from tightness stemming from planned and unplanned outages in the region, the impact of new capacities may be felt soon, particularly after the start-up of Shell’s Singapore cracker and the restart of Sinopec Zhenhai’s cracker. Market players also foresee that the impact of new capacities will make itself felt on the market particularly in the second half of the year, when there are more crackers expected to be brought online. According to Bloomberg analysts, ethylene margins will drop from US$400/ton in Q1 to US$150/ton by the end of the year after new capacities in Southeast Asia, Middle East and China are fully started up as scheduled.
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