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Naphtha cracker plants under tremendous pressure
Jun '09
According to market sources, Asian naphtha cracker operators are facing pressure of reducing production, as raw material prices are projected to rise, coupled with an influx of ethylene from new plants in Middle East and Asia.

According to sources from Indonesia, Chandra Asri Company intends to reduce its operation load to 75 percent in June due to poor profits of derivatives, such as polyethylene and a relatively low price of ethylene.

After price of crude oil futures rose, Asian prices of ordinary naphtha increased by US $18 per ton on June 5 and cargo prices for the second half of July are quoted at $596.50-599.50 per ton (CFR Japan).

But on the other hand prices of ethylene have not kept pace and grew marginally to $780-820 per ton (CFR Northeast Asia), resulting in thin profit margins for cracker plants.

In Northeast Asia, the largest cracker operator Formosa Petrochemical Corporation in Taiwan intends to reduce its plant load to 90 percent from July, due to which three cracker sets in Mailiao will be impacted.

These plants put together have a combined capacity to produce 2.9 million tons of ethylene per year. The galloping price of feedstock and raw materials are the main reasons for cutting production.

In addition, Honam Petrochemical Corporation in South Korea has also announced that it will cut cracker capacity rate of he Great Mountain plant to 90 percent which has a capacity to manufacture 1 million tons per year.

A downstream glycol plant will also cut down production capacity at the same time, including closing a glycol production line of 250,000 tons per year. A lot of new capacities are coming up in this year which is expected to put more pressure.

Fibre2fashion News Desk - China

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