Ethylene markets in Asia crumble, prices cave in, as panic spread amongst sellers

13-Oct-08

Ethylene prices in Asia have sunk by almost US$190/MT in the week. Several factors are responsible for this collapse: Naphtha prices nose dived by about 30 dollars, as crude dipped by about five dollars on Friday. The plunge in CFR Japan naphtha prices to the $600 mark also pulled down ethylene prices alongside. Laden with surplus cargoes, traders in the continent tried to out-sell each other. Despite such low pricing, demand from buyers has not picked up as they are beset with problems of dampened buying due to sharp global slowdown. Another problem facing ethylene producers is shrinking demand in the next quarter caused by a cutback in operating capacities by downstream MEG and styrene producers. Volatile input costs and weakening demand has exerted cost pressures on several MEG players: Taiwan's China Man-Made Fiber Corp plans to shutter for maintenance, its sole operational 75,000 tpa MEG line until the end of December. The company has already downed the shutters at one of its two 75,000 tpa lines in Kaohsiung last month. Another Taiwanese player- Oriental Union Chemical Corp has brought down capacities by 50% at its the 250,000 tpa MEG unit. Sinopec Shanghai Petrochemical has shuttered its' 230,000 tpa No.1 MEG unit. Japan's Asahi Kasei Chemicals is operating its 320,000 tpa No.2 styrene plant at 75% of capacity, Taiwan's Styrene Monomer Corp (340,000 tpa capacity) and Taiwan's Grand Pacific Petrochemical Corp (330,000 tpa) are operating their styrene plants at 65% of capacity.