Asian ethylene market ends September on firm note

Spot ethylene prices in Asia recorded increases throughout the past week before stabilizing on Friday, as per ChemOrbis. Surging costs were mainly driven by still tight spot availability as well as better demand in the region. These increases also found support from the gains in spot naphtha prices in the period and rebounding energy prices in the last two working days of the week. Mid-week, crude on the Nymex fell below the US$90/barrel threshold, the first time since early August, before rebounding to settle over this threshold during the last two working days of the week. Contracts for November delivery settled at US$92.19/barrel on Friday indicating a loss of less than US$1/barrel week over week, although crude oil futures lost around US$3/barrel during September. As for naphtha costs in Asia, prices soared nearly US$30/ton on CFR Japan basis over the week although they stood US$20/ton below early September levels. Meanwhile, spot ethylene prices moved noticeably higher in Asia. Spot ethylene offers surged last week by US$50/ton on CFR Northeast Asia basis, while they represented a larger increase of US$75/ton on CFR Southeast Asia basis with respect to the previous week. Spot availability in the region reportedly remained tight due to the restricted supply at Formosa Petrochemical. The Taiwanese major decided to lower their operating rates to 80% capacity at their 3 crackers at the Mailiao complex. The decision was due to a fire at Nan Ya Plastics’ No.4 MEG plant which occurred on September 26 and caused the company to shut the 700,000 tpa plant. Formosa’s crackers normally produce approximately 2.93 mln tpa of ethylene in total. According to market sources, Nan Ya Plastics plans to keep the plant down for around 3 weeks. Apart from Formosa’s unplanned decision, Taiwan’s CPC Corporation reduced the operating rates of its 380,000 tpa cracker to 80-85% by mid-September citing government inspections. Japanese Idemitsu Kosan was planning to restart its Tokuyama cracker at the end of October after shutting it in the first half of last month for a scheduled maintenance. The cracker is able to produce 623,000 tpa of ethylene under normal circumstances. On the other hand, some crackers returned from maintenance in China in the last week of September which may provide relief in availability in the coming days, as per ChemOrbis. Sinopec Sabic Tianjin Petrochemical, Sinopec Yangzi and Tianjin Petrochemical resumed operations at their crackers following planned maintenance shutdowns that started in July and August. The crackers can produce 1 mln tpa, 350,000 tpa and 200,000 tpa of ethylene, respectively.