Naphtha crackers expected to run full throttle in South Korea next month

26-Mar-09

Five South Korean naphtha crackers are currently operating at 95-100% capacity. As the won weakens making Korean imports, particularly into China, more attractive, and the subsequent improvement in demand could prompt South Korean petrochemical makers to run their plants at full throttle in the next few weeks. The sixth player, Yeochun Naphtha Cracking Centre (YNCC), has scheduled a 2 week repair plan, and hence will run its cracker at 85% capacity. YNCC, the largest ethylene producer in the country, will resume operations to 100% as soon as it completes the turnaround scheduled for March 26-April 8. Demand from China persists post-Lunar New Year contrary to expectations. It is estimated that this revival in demand could be due to a report that the regional governments of Hangzhou, Hunan, Shandong and Sichuan have issued free vouchers to local residents in a bid to encourage spending that is expected to revive the economy. As per the Korea International Trade Association, the country’s February ethylene and propylene exports rose 6.5% as compared to the previous month, mainly due to the weakening of the won by 25% vis a vis the US dollar, making Korean imports ito Asian countries comparatively economical.