Spot ethylene rising at a slower pace than propylene, styrene in Asia

Spot prices for ethylene, propylene and styrene have all been rising steadily over the past month in Asia, with styrene and propylene have been rising at a much quicker pace, as per ChemOrbis. This trend continued over the week, as news of a new fire at Formosa’s Mailiao complex led to larger increases in propylene and styrene prices as compared to spot ethylene prices. The key reason for the recent price hikes has been limited supply concerns, and the most recent fire outbreak at Formosa’s Mailiao complex has further tightened avails of all three products. A fire broke out over the weekend at Formosa’s Mailiao refinery, the third such fire to occur in the past two months and the seventh over the past year. Local authorities forced the company to indefinitely delay the restart of its No 1 cracker at the site, which Formosa was hoping to bring back on-line this month after the cracker had shut down on May 12 following a previous fire outbreak. The No 1 cracker has an ethylene capacity of 700,000 tpa and a propylene capacity of 350,000 tpa. Formosa announced that it is still planning to conduct a scheduled maintenance shutdown at its No 3 cracker at the same site in August, meaning that two of the company’s crackers at Mailiao would be shut at the same time. The No 3 cracker has an ethylene capacity of 1.2 million tpa and propylene capacity of 600,000 tpa. The spot propylene market reacted vigorously to the news of the latest fire outbreak in Formosa as spot prices on an FOB Korea basis jumped US$65/ton yesterday to bring the week-over-week increase figure to US$90/ton. Spot propylene prices have posted cumulative increases of US$220/ton when compared with the beginning of July. Sellers commented that they are seeing healthy propylene demand from the Chinese market and that the recent rise in prices has not been solely the result of tightening supplies. Spot styrene prices on an FOB Korea basis also posted large increases at the start of the week as players began to weigh the likely effects of the latest troubles at Formosa’s Mailiao complex on the styrene market. Formosa’s No 1 and No 2 styrene plants at Mailiao may remain shut until September following the most recent fire outbreak at the facility. This helped spot prices record an increase of US$35-40/ton yesterday, pushing the week over week increase amount to US$85/ton. Spot styrene prices have posted cumulative increases of US$205/ton since the beginning of July. Prices also rose in the spot ethylene market following the latest difficulties at Mailaio, although the ethylene increases were more subdued than the spikes seen in propylene and styrene prices. Spot ethylene prices on a CFR NEA basis gained ten dollars at the start of this week to push the week-over-week increase level to US$20/ton. When compared with the beginning of July, spot ethylene prices have posted a comparatively modest rise of US$50/ton. Sources commented that the market does not expect any major shortfall in ethylene supply even after the latest news from Formosa. Traders said that they expect to see a large volume of Iranian ethylene delivered to Asia in August while adding that ethylene demand from Taiwan might also slow down as a number of ethylene derivatives such as PE, PVC and MEG are also produced at Formosa’s Mailiao complex. Formosa has already shut down 2 PE lines with capacities of 260,000 tpa of LLDPE and 350,000 tpa of HDPE.