Second week of decline in Asian spot ethylene from 17 month highs amid weak derivative demand

Spot ethylene values in Asia are on the decline for a second consecutive week, dipping from 17 month highs of US$1400/ton amid weak derivative demand, raising concerns of a sustained price downtrend, as per ICIS. This week, offers for H2-Feb/March arrival spot ethylene fell to US$1300-1320/ton CFR Asia as compared to deals concluded at above US$1350/ton CFR Asia in the week ending 5 February. Late January saw CFR NE Asia prices spike to US$1400/ton on tight supplies from the Middle East and Asia. However, the unyielding ascent of monomer values took a toll on key derivative sectors of polyethylene (PE), vinyls and monoethylene glycol (MEG), forcing production cuts at downstream plants. PE makers saw negative margins, hence it was not possible for ethylene to continue at such high levels due to lack of support from PE. Integrated HDPE margins fell by US$12/ton week-on-week to US$467/ton last Friday but stand-alone margins have remained in negative territory since December 2009 and were at minus US$173/tonne in the week ending 5 February. Deterioration in buying momentum from China ahead of the Lunar New Year holidays (14-19 February), has also arrested ethylene’s price amid increased supply from the Middle East. A 4,000-5,000 ton ethylene cargo from Abu Dhabi, UAE for 10-15 March loading was offered early last week. An increased availability of cargoes is expected from Rabigh, Saudi Arabia amid talk of production issues at a 600,000 tpa linear low density PE (LLDPE) plant in the country, that will render surplus ethylene availability. Estimates peg this month’s ethylene exports from Rabigh at 10,000 tons. Sellers were banking on a heavy cracker turnaround schedule in 2010 (please see table below) to support ethylene prices but this could be offset by the emergence of new plants such as the start-up of Shell Chemicals’ 800,000 tpa naphtha cracker in Singapore in Q1-10, with annual ethylene exports of 150,000 tona. In China, more than 2.5 mln tons of new ethylene capacities are expected to come on stream in 2010, bringing down import volumes
MonthCompany NameLocationCapacity (t)Turnaround dates
FebPTT ChemicalMab Ta Phut, Thailand460,000mid-Feb for 35 days
 Sanyo PCMizushima, Japan470,000mid-Feb for mid-Apr
 ExxonMobilJurong Island, Singapore900,000mid-Feb for 2 wks
MarCNOOC-ShellHuizhou, China800,000early Mar for 2 mths
 Showa DenkoOita, Japan675,00013 Mar - 26 Apr
 Tosoh CorpYokkachi, Japan527,00014 Mar - 16 Apr
 LG ChemYeocheon, Korea900,0003 Mar - 8 Apr
AprBASF-YPCNanjing, China600,000Apr-May
MayKeiyo EthyleneChiba, Japan740,00011 May to 17 June
 YNCCYeocheon, Korea400,00017 May to 20 June
JunMitsuiOsaka, Japan450,00017 Jun to 26 Jul
 MitsubishiKashima, Japan375,0008 May to 26 June
 PTT ChemicalMab Ta Phut, Thailand515,00030 days
JulMitsubishiKashima, Japan453,00017 May to 12 Jul
AugTonenKawasaki, Japan515,0001 mth (TBC)
 Yangzi PetchemNanjing, China650,0001 mth (TBC)
SepFormosaMailiao, Japan1,030,000Sep-Oct
OctYNCCYeochen, Korea850,0004 Oct to 2 Nov
 SK EnergyUlsan, Korea690,0004 Oct to 2 Nov
 MaomingMaoming, China380,000around 30 days
 TitanPasir Gudang, Malaysia400,0001 mth (TBC)
 CPCLinyuan, Taiwan385,000mid-Oct to H2 Nov
NovRayong OlefinsMab Ta Phut, Thailand800,000TBC
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