Eneos’ delayed Kawasaki cracker restart lifts CFR NEA ethylene prices to near 2-year high

Asian ethylene and propylene markets have been bullish since the start of 2021. A confluence of factors such as stronger crude and a more bullish global outlook with regards to vaccine development and availability to control the coronavirus, have led to a greater confidence and optimism amongst market participants on the olefins markets.

Last week, an ethylene cargo purchase by Japan’s Eneos Corp (formerly known as JXTG Nippon Oil & Energy) at $1090/ton CFR NEA lifted ethylene prices to a near 2-year high.

The Japanese producer had stepped into the market to purchase spot ethylene as the larger Kawasaki cracker had failed to resume operations on January 4 as planned, and is expected now to restart in end-January or early February, according to sources.

The company had shut the Kawasaki cracker on December 4, 2020 for repairs after a technical issue at the butadiene separation unit, and had initially planned to resume production on December 28. The cracker has an annual capacity of 515,000 tons/year ethylene capacity, 300,000 tons/year propylene capacity and 105,000 tons/year butadiene capacity.

Spot ethylene prices were assessed at $1060/ton CFR China and $1000/ton CFR SEA on January 8, up $50/ton from a week ago.

As can be seen in the graph created by ChemOrbis Price Wizard, CFR China ethylene prices hit a high of $1198/ton CFR China in mid-February, 2019, before tumbling and reaching a nadir at $355/ton CFR China on April 20, 2020, and since then, prices have recovered to current highs.



Will current market tightness propel ethylene higher?

Traders believe that the current market tightness would likely propel ethylene prices higher, as Eneos Corp will likely have to buy more spot ethylene cargoes to meet production requirements, and Thai PTTGC had just issued a buy tender for 3500-5000 tons of ethylene, 15-19 Jan arrival.

The recent Petro Rabigh tender for 9,000 tons of ethylene was awarded at $900/ton FOB Saudi Arabia, loading January 23, and the cargo would be delivered at around $1050/ton CFR NEA.

“Also, several major Chinese buyers would still need to import ethylene for Q1. China’s estimated ethylene imports for 2021 are likely to be only slightly lower than 2020’s 2.5 million tons average,” said a European trader.