Asian ethylene, propylene prices swing amid all-out efforts to reduce supplies, demand slump

Asian ethylene and propylene prices have managed to tick up this week following the renewed slump of last week in the midst of more concerted efforts, especially by South Korean and Taiwanese producers, to tighten olefins supply owing to further margin erosion.

The past two to three weeks of intermittent shutdowns due to technical issues and power failure at the Pengerang Refinery and Petrochemical Integrated Development (RAPID) complex have also aided to slow the decline in ethylene and propylene prices, but were insufficient to sustain a meaningful price recovery.

With persistent weak demand across both Northeast and Southeast Asia, regional producers have already managed to sustain disciplined and consistent run rate cuts at crackers and PDH plants. This week, LG Chemical has decided to advance its October maintenance turnaround to September for an extended three-month period.

Spot ethylene prices have edged up by $10/ton this week to be assessed at $880/ton CFR China and at $950/ton CFR Southeast Asia, as of August 2, after falling $20/ton last week.
Spot propylene prices have also ticked up $5/ton this week to be assessed at $900/ton CFR China, and at $960/ton CFR Southeast Asia, as of August 2, following a slight fall of $5/ton last week.



LG Chemical, Formosa advance cracker turnarounds; YNCC mulls bringing forward No 3 cracker shutdown

Producers across Northeast Asia, from South Korea to Taiwan, Japan and China, have maintained, as well as increased cracker and PDH plant rate cuts. Regional producers have no option, given the continuous demand slump, but to reduce cracker and PDH plant operating rates to reduce production losses.

South Korea’s LG Chemical has three crackers located in Yeosu and Daesan, which produce around 3 million tons/year of ethylene. The producer has decided to advance its Yeosu-based 1.2 million tons/year ethylene cracker maintenance turnaround from mid-October to mid-September, with the shutdown lasting until mid-December, according to industry sources.

YNCC has also reduced operating rates at its three Yeosu-based crackers to 70-80%, according to industry sources. The crackers produce an estimated 2.3 million tons/year of ethylene and 1.15 million tons/year of propylene capacity. The producer is also considering pushing forward the 470,000 tons/year No 3 cracker turnaround from early October. The revised date is still under discussion, traders said.

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.

Meanwhile, Taiwan’s Formosa Petrochemical Corporation (FPCC) has already advanced 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 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 late august. Meanwhile, the producer has cut cracker rates further at its No 4 naphtha steam cracker located in Lin Yuan, Kaohsiung. The cracker had 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.