Supply constraints push Asian ethylene and propylene markets up

Spot ethylene and propylene markets firmed up further over the past week in Asia. Overshadowing thin trading activity amidst short holidays in the region as well as lower naphtha values, supply constraints drove the bullish trend, as per ChemOrbis. Supply was affected by ongoing production outages at regional crackers. More crackers are due to be brought offline for maintenance in the next couple of months. Spot ethylene gained US$5/ton week over week on CFR Northeast Asia basis, while the increase amount was larger at US$85/ton with respect to early March. The market was calm as Chinese players were on holiday for most of last week due to Qing Ming Festival that took place from April 1-3. Overshadowing weak demand from downstream markets, restricted availability led spot ethylene offers to remain on their firm path for another week. Japanese Showa Denko’s initial plan to restart its Oita cracker early in H2-March, was delayed due to some issues which occurred at the cooling system of the cracker. With ethylene capacity of 695,000 tpa, the cracker has been offline since March 10. On Friday, CPC Corp experienced a fire at its petrochemical complex in Taiwan at Kaohsiung that has resulted in the shutdown of the company’s No. 5 cracker with 500,000 tpa of ethylene. Similarly, the spot propylene market has been facing restricted supplies due to plant outages, leading to new gains in prices. Spot propylene costs surged by US$40/ton in the past week on FOB South Korea basis, soaring by US$155/ton since the beginning of March, as per ChemOrbis. SK Energy had to bring offline its No. 2 RFCC (residue fluid catalytic cracker) located in Ulsan, South Korea at the start of last week. The company cited a catalyst leakage as the reason behind the unexpected shutdown, saying that they would restart the cracker at the end of the week. The RFCC can produce 350,000 tpa of propylene. Taiwan’s CPC Corp, which had to shut its No. 5 cracker on Friday, has a propylene capacity of 250,000 tpa. Apart from these newest developments on the production side in Asia, several crackers have been under scheduled maintenance since last month, many of which will last through the month of April. South Korean YNCC shut its No.2 Yeosu cracker between March 20-April 15, while the cracker produces 857,000 tpa of ethylene and 485,000 tpa of propylene under normal circumstances. Asahi Kasei shut its Japanese cracker on March 5 and plans to resume operations by mid-April. The cracker produces 470,000 tpa of ethylene and 300,000 tpa of propylene. Another Japanese company, Tosoh, took its Yokkaichi cracker down from March 11 until April 15. The cracker is able to produce 527,000 tpa of ethylene and 270,000 tpa of propylene. Also, South Korean Honam Petrochemical shut its cracker between March 1-April 10 for maintenance, with the cracker having ethylene and propylene capacities of 720,000 tpa and 360,000 tpa, respectively. In addition to these ongoing shutdowns, Taiwanese Formosa Petrochemical will take its metathesis unit down for a month long maintenance in April. The unit produces 270,000 tpa of propylene.