Asian ethylene makers to switch to alternative feedstock to secure a recovery in the market

Petrochemical producers in North Asia whose output and profits have been largely hit by record-high regional naphtha prices, will resort to alternative feedstock at their crackers. This switch from naphtha will help them secure a recovery in the ethylene market. Firm ethylene prices in recent weeks denote that cracking continues to remain profitable. Despite Asian open-spec naphtha for May has spiked past US$943/MT this week, ethylene continues to fetch about US$400 more than the mainstay feedstock, the widest in more than two months. An ethylene-naphtha spread of US$275-400 covers overhead costs for North Asian crackers. Most petrochemical firms in South Korea as well as Taiwan's Formosa Petrochemical Corp plan to use more liquefied petroleum gas (LPG) from April and May to maximise profits before ethylene margins start to weaken. Petrochemical makerss usually consider switching to LPG when its price falls to 90-92% of naphtha. Currently LPG was 90.5 percent of naphtha prices on Wednesday. South Korea has scrapped an import tax on LPG with effect from April 1, making it cheaper. However, with LPG's use as a petrochemical feedstock increasing, prices are bound to rise. Samsung Total Petrochemicals has used 20,000 tons of LPG a month from April, Honam Petrochemical Corp is using 25,000 tons a month since March. LG Chem will use 30,000 tonnes in May. Other South Korean players like Yeochun Naphtha Cracking Centre (YNCC), SK Energy, GS Caltex, Korea Petrochemical Industrial Co and Lotte Daesan and Taiwan's government-run CPC Corp do not use LPG as their crackers cannot break down the alternative feedstock efficiently enough. Weighed down by ample supply and cheap alternative feedstocks, naphtha prices in Europe continue to hover more than thirty dollars below Asian benchmarks in the past week. Hence, another option to save on costly feedstock is to source cheaper naphtha from outside Asia.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha