Asian olefin markets climb on higher upstream costs

Spot olefin markets in Asia showed significant upward momentum over the past week. Despite the fluctuating energy complex for most of last week, sentiments firmed up, especially on Friday as crude oil prices recorded their largest daily spike since March 2009. This was triggered by the optimism that Europe’s debt crisis might be contained. In addition, rising spot ethylene, propylene and styrene prices were also supported by the restricted availability due to regional cracker shutdowns and revived demand for July. Crude oil on the Nymex posted its largest increase in over three years on Friday, with August futures jumping US$7.27/barrel to settle at US$84.96/barrel. European leaders agreed to ease repayment rules for emergency loans for Spanish banks while also agreeing to relax conditions on help for Italy. The beginning of the European Union’s embargo on Iranian crude on July 1 and OPEC’s lower output were also cited as factors supporting the higher settlement. The Organization of Petroleum Exporting Countries’ (OPEC) crude oil production decreased in June led by Iran’s reduced output. Production in Iran, OPEC’s second largest producer after Saudi Arabia, dropped 65,000 barrels to 3.16 million barrels/day, the country’s lowest production level since June 1992. Furthermore, Norway’s first industry wide energy strike entered its sixth day on Friday. The strike was halting around 250,000 bpd of crude production as well as limiting natural gas output. In Asia, spot naphtha prices rose US$50/ton on CFR Japan basis on the week, although they remained US$40/ton below the levels of early June. Spot ethylene prices rose US$40/ton on CFR Northeast Asia basis by the end of week, but the recent offers continue US$30/ton below the early month levels. Spot propylene costs increased US$45/ton week over week on FOB South Korea basis, with the recent levels representing a US$20/ton gain since June 1. Spot styrene prices recorded larger increases over the week on the back of firmer benzene costs in the region. Spot benzene offers climbed US$60/ton on FOB South Korea basis in a week, while they indicated a US$20/ton increase when compared to June 1. Higher upstream costs pushed spot styrene offers up by US$75/ton with the same terms, with the values also recording the same amount of spike in a period of one month. In addition to firmer upstream markets, restricted supply was another driver behind last week’s rally for these monomers as the outage at Formosa Petrochemical remains in place since June 20 after a power outage. According to the most recent market reports, the company planned to restart its No. 2 cracker early this week, while being set to restart its No.3 cracker on July 10. The crackers have ethylene capacities of 1.03 mln tpa and 1.2 mln tpa, respectively, while their propylene capacities are 515,000 tpa and 600,000 tpa. Additionally, another Taiwanese-CPC Corp. will reportedly shut its No. 4 cracker starting from this week given a technical issue. The cracker, which produces 380,000 tpa of ethylene and 193,000 tpar of propylene, will be down for around 10 days. The company does not plan to lift the operating rates of its No. 5 cracker at Kaohsiung during the period. The cracker can produce 500,000 tpa ethylene and 250,000 tpa of propylene.
  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