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Ethylene producers turn to LPG for feedstock as naphtha prices zoom
Mar '09
Naphtha price denominated in March is US $46.44 per barrel and the average price prevailing during the current month is $44.0 up to now, down $2.87 from the average price of the previous month. Month-to-month gap between spot naphtha prices has widened, due to steady demand from East Asia.

Chinese Petroleum Corporation (CPC), Taiwan is sourcing global naphtha cargo for the second half of May. However, one trader said that Taichung Oil Company has started to use liquefied petroleum gas (LPG) as raw materials for ethylene plant, which could lead to reduction in naphtha consumption by the company in short term.

Government-owned Chinese Petroleum Corp. of Taiwan (CPC) uses LPG produced by its refinery as around 5 percent of raw material supply and if price gap between naphtha and LPG widens more, it may then increase the use of LPG in place of naphtha as raw material for ethylene.

Chinese Petroleum Corporation has suspended its procurement of naphtha cargo for the second half of April and there is a probability that it may suspend the procurement of naphtha cargo for the first half of May too.

Chinese Petroleum Corporation operates three ethylene plants with capacities of 230,000 tons, 385,000 tons and 450,000 tons, respectively. Currently all the three crackers are operated at 80-85 percent operating capacities.

A transaction has been concluded by a Indian state oil major at $55 per ton premium on a cost and freight (C&F) basis. As per the terms of the contract, 18,000 tonnes of naphtha will be supplied each month by ENOC, from April 2009 till March 2010.

Japan's market benchmark price of open specification naphtha for the first half of May grew from $423.50 to $425.50 per ton. Naphtha price difference between the first half and the second half of May was US $6.50 per ton.

Fibre2fashion News Desk - China

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