Crackers in Asia to run ethylene production at near full rates

Current strong downstream prices have supported ethylene production at crackers in Asia at near full rates for the consecutive month in July, against earlier expectations, as per ICIS. Most of the 67 crackers in northeast and southeast Asia are expected to operate at 90-100% this month. Producers are in a mood to ramp up production and push sales as they anticipate a supply glut and price dip in the next quarter when new capacities come on stream in China and Middle East. Delays in polyethylene (PE) and monoethylene glycol (MEG) exports to Asia from the Middle East and postponements in the start up of new crackers in China had kept polymer prices high in June despite waning PE demand following the price spike. HDPE film grade spot prices were assessed at US$1,200-1,280/ton CFR China last week as per ICIS. This represented a healthy spread of around US$300/ton compared with ethylene spot prices, which were at a eight-month high of US$910-950/ton CFR NE Asia over the same period. The healthy margins that PE makers currently enjoy have spurred some olefins traders to set ethylene price targets at above US $1,000/ton CFR Asia after recent reported deals at US$920-950/ton FOB Taiwan for July delivery. The rebound in feedstock naphtha and crude values to above $71/bbl early this week were also expected to provide some support for the monomer. Ethylene prices in southeast Asia stand a higher chance to breach the US$1,000/ton level as recent cracker shutdowns and high derivative polymer operating rates in Iran had severely curtailed the supply of ethylene to southeast Asia from the Middle East.
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