Taiwanese CPC's first export of ethylene this year

13-Jun-05

Taiwan is a net importer of ethylene, mainly used to make plastic products. It imported 414,000 tonnes in 2004. Rising inventories and low domestic demand have caused various Taiwanese petrochem plants to shutdown or work at reduced capacities and led to poor margins and CPC's first export consignment in one year. Ethylene prices are pegged at around US$620-630/ton C&F North Asia, although CPC's domestic customers pay more than US$800/ton under long-term contracts, cutting deep into their margins. This is a reverse of last year when the buyers enjoyed lower term prices when spot values hit record-highs. CPC had shut its 230,000 tpa No. 3 Linyuan naphtha cracker and scaled back operations to 80-90% capacity at two other crackers - the 385,000 tpa No.4 unit and 500,000 tpa No.5 unit in Kaohsiung. Even though CPC had been offering one or two ethylene cargoes at about US$700/ton, C&F North Asia, it had found no buyers. This is due to the low demand for ethylene in the past few months due to weaker petrochemical consumption, resulting in ethylene spot price falling to a low of about US$590/ton last week from a high of about US$1,300/ton late last year. Tentatively, it is planned that the No. 3 cracker will start at the end of June when CPC's No. 5 cracker shall be shut for repairs. However, the restart may not happen as planned if inventories remain high. High inventories will need to be run down before restarting the No. 3 cracker.