Several planned ethylene maintenance shutdowns likely to prop up markets in Asia

08-Apr-15

Ethylene manufacturers are anticipating good business, as petrochemical plants at home and abroad kick off their regular maintenance for Q2-2015, as per businesskorea.co.kr. The over-demand for ethylene is expected to continue to H2, with the price of ethylene going up due to the recent increase in oil prices. According to industry sources, a total of 16 petrochemical plant maintenance projects are scheduled for this year in Asia- 9 of them between April and June. The combined annual ethylene production capacity of the nine plants located in Korea, China, Japan, and Taiwan is 6.2 mln tons. This means that the ethylene supply shortage in the region is likely to be exacerbated. The ethylene price recorded US$1458/ton in January 2014, but dropped to US$900 or so in February 2015 due to the plummeting oil prices and supply glut. Prices have rebounded to US$1300 at the end of March, amid rallying oil prices since late January. Ethylene manufacturers running their own naphtha cracking plants are pleased with the situation. The rising ethylene price has caused a difference between the ethylene and naphtha prices, to reach as high as US$800/ton. In general, business conditions are considered to be favorable when the spread is at least US$400. “An ethylene-naphtha spread of over US$800 per ton has been very rare, and this implies the companies running naphtha cranking centers are ready to beat the recession,” the Korea Petrochemical Industry Association explained, adding, “In addition, large-scale NCC maintenance projects are predicted to follow one another in the region, with few expansion projects scheduled, so the recovery can pick up speed.”