Asian naphtha crackers face uncertainty and a challenging future

13-Oct-08

South Korea's largest ethylene maker, Yeochun Naphtha Cracking Centre (YNCC) has planned to curtail production rate by about 5-20% at its three naphtha crackers processing 1.8 mln tpa. Another South Korean naphtha processor, SK Energy will keep running its No.1 unit at 70-80% operating rate. Further, Korea Petrochemical Industry Co (KPIC) has plans to slash operations by 10% for its 460,000 tpa naphtha cracker within a span of few days. On persistently slack demand for naphtha in Asia, Taiwan's Formosa Petrochemical Corp, Singapore's Petrochemical Corporation and Japan's Mitsubishi Chemical Corp have been operating at curtailed rates. Taiwan's CPC Corp recently delayed the resumption of its naphtha unit for the third time, due to higher Asian inventories and low demand. This adverse situation has led to driving a rare cargo of Indian naphtha to the US, which otherwise is delivered in Asia. Also, the Asian naphtha prices to a discount relative to Brent crude for the first time after 2001. The upcoming Middle East ethane-based and more efficient crackers will further add to the turmoil of Asian petrochemical makers.