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Naphtha crackers to face margin pressures
27
Oct '10
As a lot of new cracker capacities are being set up in China and the Middle-East in the current and next year, experts are of the opinion that, margins of these ethylene producers may be slashed in the coming years.

The naphtha crackers operate on a profit margin of around US $150-155 / ton, currently which had gone up to $240-250 / ton, when the naphtha cracker of Formosa had gone off-stream in July, due to which supplies were reduced.

It is expected that these profits will plunge to below $100 per ton, once the new Asian ethylene capacities are brought on-stream in the current and next year.

For instance in the past 12 months alone, China has activated three ethylene plants with a capacity of one million tons each and according to government reports, ethylene output touched a record 9.25 million tons in August.

The capacity boost in recent times by China has led to lower imports by the country and a further increase in its ethylene output, could spell trouble for ethylene producers in South Korea and Taiwan, which export a major portion of their production to China.

According to the China Petroleum and Chemical Industry Association, the annual ethylene capacity may increase by 56 percent to 23 million tons by 2015 and in the process reduce import dependency from 55 percent to 30 percent.

This is clearly reflected from the fact that, ethylene imports plunged by 31 percent to 64,144 tons in August, when compared with the same month of the previous year.

Fibre2fashion News Desk - India

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