Asian ethylene, propylene extend losses on renewed China Covid fears

Asian ethylene and propylene prices continue to lose further momentum, falling further this week amid renewed concerns of fresh Covid-19 infections which may lead to another round of lockdowns across even more cities, including the key manufacturing and shipping hubs of Shanghai, Shangdong, Shenzhen, Guangdong, Hainan, Jiangyin and Wuxi.

The downslide started around early March, and is heading into the fifth month. Traders said they fear there may not be an end soon. They reiterate though that the historical lows of sub-$400/ton CFR China ethylene price in 2008 and 2020, are still a long way from the current $900s/ton CFR China.

Producers are also becoming skittish, stating that the absence of foreseeable demand recovery is driving both market sentiment and prices lower, and this may remain endemic. The key downstream markets continue to languish, also with no respite to be seen in demand or pricing recovery.

Spot ethylene prices fell $20/ton from last week to be assessed at $920/ton CFR China and at $960/ton CFR Southeast Asia as of July 12.

Spot propylene also declined $20/ton to be assessed at $915/ton CFR China, and at $955/ton CFR Southeast Asia as of July 12.

Since the downfall started in early March, spot prices have lost 33% for ethylene and 29% for propylene, according to ChemOrbis data.



Taiwan’s Formosa advances cracker turnaround; South Korean producers increase cracker rate cuts

Producers across Northeast Asia, particularly in South Korea, have deepened cracker and PDH plant rate cuts. Taiwanese producers have also advanced their planned maintenance shutdowns, while China, Japan and Southeast Asia producers have been maintaining reduced cracker and PDH plant operating rates to minimise production losses.

Taiwan’s Formosa Petrochemical Corporation (FPGC) plans to advance the maintenance turnaround of its No 2 Mailiao cracker, with an ethylene capacity of 1.03 million tons/year, from mid-August to mid-July due to negative cracker margins. The turnaround will last until the end of September. Its No 1 and No 3 naphtha steam crackers, also located at Mailiao, are operating at reduced rates.

FPCC owns three naphtha crackers located in Mailiao, that have a combined production capacity of 2.93 million tons/year of ethylene, and 1.465 million tons/year of propylene.

Taiwan’s state-owned CPC has shut its Taoyuan-based No 1 residual fluid catalytic cracker, with 100,000 tons/year propylene capacity in early July for a scheduled extended turnaround, which will be restarted in end August. Meanwhile, the producer has cut cracker rates further at its No 4 naphtha steam cracker located in Lin Yuan, Kaohsiung. The cracker has undergone various shutdowns this year, initially due to a January 8 fire and further, due to technical issues. The steam cracker produces 385,000 tons/year of ethylene and 230,000 tons/year of propylene.

South Korea’s LG Chemical has three crackers located in Yeosu and Daesan, which produce 3 million tons/year of ethylene. The producer is currently operating at reduced rates of 80-85%, according to traders.

Lotte Chemical has two crackers located also in Yeosu and Daesan, which produce 2.33 million tons/year of ethylene. The producer is said to have lowered operating rates to 75-80%. South Korean producers are currently operating crackers at 75-90% rates due to negative production margins, according to industry sources.