Tight supplies pave the ground for ethylene increases in Asia

29-Jul-14

In Asia, spot ethylene prices have recorded significant increases when compared with the levels reported at the beginning of July, according to ChemOrbis. This upward momentum was triggered by tight supplies in the region while prices reported on North East Asia basis recorded larger gains, by around US$65/ton, when compared with the hikes seen in Southeast Asia. This gap between the two regions can be attributed to increased supply issues faced by North East Asia. Pricewise, spot ethylene values were US$95/ton higher in Northeast Asia and US$30/ton firmer in Southeast Asia when compared to July 1. Export ethylene availability from South Korea, Japan and Taiwan has been limited given maintenance shutdowns. In operations news, Taiwanese CPC Corporation had a planned maintenance shutdown at their 500,000 tpa No. 5 cracker on April 29. The cracker was to restart by mid-July but there have been no updates on the cracker’s status by the time of publishing.In Japan, Mitsubishi Chemical shut their 500,000 tpa cracker for maintenance between late June and end July. Mitsui Chemicals, shut their 450,000 tpa cracker on June 19. The restart was slated for end-July. There are also some planned shutdowns for the upcoming month of August. Tonen Chemical is planning to halt their operations at their 540,000 tpa cracker in Kawasaki, Japan between August and September, for a month. Formosa Petrochemical is mulling over a 45-day shutdown at its No 3 steam cracker located in Taiwan, expected to start as of August 15. In the downstream markets, Chinese PE players started to receive firmer import August prices from the Middle Eastern and Southeast Asian producers, as per ChemOrbis. However, some players claim that sellers are aiming to push for another round of increases given the limited PE supplies and firmer feedstock costs. A Southeast Asian producer lifted their August LDPE film prices to China by US$20/ton and HDPE film prices by US$10-30/ton. According to a source from this producer, Middle Eastern producers are mostly diverting their cargoes to Europe, where they see better margins, and this situation causes PE supplies to be limited in Asia.