Price of petrochemical rising in Asia amid plant repairs and maintenace shutdowns

Prices of petrochemicals are rising in Asia, amid higher crude oil prices last month as well as supply reductions resulting from periodic shutdowns of production facilities, as per Nikkei Asian Review. Petrochemical products, especially intermediate materials, are now quoted at prices 10% to 40% higher than their most recent lows. While demand remains firm in China and other Asian markets, price of synthetic resins are expected to fall by narrow margins as part of price-cut negotiations in Japan. Spot prices of ethylene are now around US$1200/ton, 40% higher than the most recent low in early February. Periodic repairs of ethylene production facilities in Thailand started in February. Japanese producer Tosoh and South Korean petrochemical manufacturers are also conducting regular maintenance. Repairs are concentrated this year, with a number of them planned to take place in Japan and other countries in May or later. Demand for petrochemical products remains strong in China and has only been affected to a limited extent by the slowdown in the country's economy. China's imports of low-density polyethylene, used to make wrapping materials, increased about 30% in volume in February from a year earlier. The nation's imports of benzene, for production of engineering plastics, exceeded 100,000 tons for the first time in eight months. Inventories of petrochemicals have been building up in China since the Chinese New Year, said an official at a major Japanese trading house. Prices of synthetic resins are rising along with ethylene prices. Polyethylene is now quoted at around US$1235/ton, up 17% from a low in January, while polypropylene has climbed 25% to about US$1000. The increases are limited because supply and demand are not as tight as for ethylene. While profit margins for ethylene are widening, price increases for synthetic resins lack steam, and that is narrowing profit margins for integrated manufacturers that make them from naphtha, a leading chemical company official said. Crude oil prices have fallen this month amid an uncertain outlook for talks among oil producers over a freeze on output increases. Still, analysts by and large are expecting petrochemical prices to stay firm in Asia as checkups of production facilities continue. In Japan, prices of synthetic resins are forecast to decline starting this month, due to the delayed effect of crude oil prices that fell until early this year. Synthetic resin prices are highly likely to fall by smaller margins than those of naphtha.