Cracker run rates to augment in Asia and Europe on recovering demand

20-Jan-09

This week has witnessed a boost in feedstock and polymer prices in Asia. As downstream demand recovers, key players in Taiwan and South Korea are mulling a hike from reduced levels in run rates. Steam crackers in Europe have also increased their run rates by about 8-10% on marginal improvement in buying interest, and recovering downstream markets. Demand still continues to be lower than normal, and may not yet have reached a stage of continued recovery from recent weakened levels. Production margins also continue to be squeezed, but are expected to improve on recovering demand. Most buyers have returned to the markets in a bid to pile up eroded inventories, as prices shows signs of having bottomed out. Consumption still needs to show positive recovery signs. Growing buying interest in the naphtha markets is a consequence of spot buying by few petrochemical producers who have not inked any term contracts or have reduced their contract deliveries for the year.