Ethylene producers bid goodbye to steep profits

26 Jun '10

2 min read

Market participants had recently expressed their opinion that, naphtha cracker operators in Asia may drop operational rate in the second half of this year, if ethylene prices continue to lower in the coming days.

According to a ICIS price report, ethylene prices in Asia fell to $930 per ton (CFR, Northeast Asia) last week, testing a 7-month low, due to the impact of increased supply and higher inventory in the Middle East.

Japan has eight sets of ethylene crackers under downtime plan this year, which is expected to complete by the end of August.

In Southeast Asia, the only cracker operator Chandra Asri in Indonesia plans to reduce operating rate of its 600,000 tons per year plant located in Cilegon to 80 percent in July, while its capacity utilization in June is about 90 percent.

In the first half of this year, operating rates of Asian naphtha crackers generally remained at 90 percent and 100 percent, due to the over $400 per ton gross margins derived from ethylene production

But since the second half of May, the sharp decline in ethylene prices has affected the gross margin of ethylene manufacturers.

An olefin trader in Shanghai, China believes that market environment will become more difficult in the future, as concerns about the debt crisis in Europe and tightening credit of Chinese government will impact consumer demand, thus affecting petrochemical industry.

Fibre2fashion News Desk

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