SEA ethylene, propylene prices diverge following SCG’s force majeure; NEA ethylene slips further

Last Friday, Thailand’s SCG Chemicals declared force majeure on all petrochemical products, following a fire at a chemical tank in Map Ta Phut port, Rayong. The producer stated that operations at both Map Ta Phut, the Rayong Olefins (ROC) and Map Ta Phut Olefins (MOC) crackers were severely impacted. In terms of olefin prices, there were initial knee jerk responses, with spot propylene prices rebounding to $830-850/ton CFR SEA whilst spot ethylene prices traded slightly higher, at $990/ton CFR SEA.

Prior to the fire incident, spot propylene prices were drifting to the low $800s/ton CFR SEA by mid-last week whilst ethylene prices had also slipped to $970/ton CFR SEA. This week, as traders and buyers reassess the impact, spot propylene prices have stabilized at the $830/ton CFR SEA level, as SCG Chemicals is an exporter of propylene. In terms of the impact on ethylene, the disruption in operations also affected the producer’s downstream PE and PP plants. The fire limited the transportation, delivery, and receipt of feedstocks and products at the terminal. As the producer is net short of ethylene, the loss of this large buyer has exacerbated the slide in spot ethylene prices.

SEA ethylene prices likely to come under greater pressure

Besides the absence of SCG Chemicals from the spot ethylene market for May and likely June, two other large buyers will also not be purchasing ethylene feedstock for May/June. Indonesia’s PT Chandra Asri shut the Cilegon-based, West Java cracker in early May for 45 days of scheduled maintenance turnaround. The Indonesian producer is a large buyer of both propylene and ethylene.

Additionally, Lotte Chemical Titan also took down the No 2 naphtha cracker located at Malaysia’s Pasir Gudang in late April for a month of planned maintenance. The cracker produces 525,000 tons/year of ethylene and 280,000 tons/year of propylene. The producer is also a major buyer of spot ethylene and propylene, traders said.

Spot ethylene prices have again drifted lower this week, with bids and offers falling to $950-$980/ton CFR SEA for May. Traders fear there will also be pressure from Chinese producers offering into SEA to get better netbacks since China’s ethylene prices have slid to $850-860/ton CFR.

SEA propylene prices stable but active selling may undermine prices

SEA spot propylene prices have managed to hold steady this week following the bounce up to $830/ton CFR from the low $800-805/ton CFR SEA range, following the force majeure. Traders note that there are still threats to propylene’s price stability, as supply is still far longer than demand.

There are still several producers who are offering spot cargoes for May and June. Besides Singapore’s Shell and PCS, Malaysia’s PRefChem has restarted the Pengerang naphtha cracker, and traders report that the Malaysian producer had sold a 5000-ton spot cargo via tender for May 12-13 shipment. Additionally, as Chandra Asri’s cracker and downstream units are shut, Indonesia’s PT Pertamina had also sold two spot propylene cargoes for early June loading. Earlier, the Indonesian producer had sold several propylene cargoes to China for May.

Traders commented that spot propylene prices may edge lower should selling picks up in May and June. However, prices will still be underpinned by higher production costs, which will provide a floor price for propylene. To stem the slide in CFR SEA propylene prices, several trading firms were also reported to have shipped cargoes to NEA/China to try to achieve better netbacks.

NEA ethylene edges lower, propylene flat amid weak demand

Meanwhile, in Northeast Asia/China, ethylene prices have slipped again, weighed down by weak derivative demand and expanding supply. Trader reports persist, of more ex-US Gulf ethylene cargo arrivals in June and July. Traders note that an estimated 100,000 tons of ex-US Gulf ethylene cargoes will arrive in Asia/China between June and mid-July.

NEA/China ethylene supply has been growing despite regional producers cutting cracker run rates again. South Korean producers have now cut cracker run rates, due to regional oversupply, higher naphtha feedstock prices, and sluggish demand. Persistently weak derivative demand and prices have also reduced support for any higher ethylene feedstock prices, traders commented. Traders added that most of the key derivative markets, including PE, SM, PVC, MEG, and EO, are not profitable.

For propylene, there are no deep-sea cargoes to flood the market, but supply has lengthened in China, with more PDH plants restarting in April. Demand has remained stagnant and is unable to boost spot propylene prices.

NEA spot ethylene prices slipped $10/ton from last week to be assessed at $860/ton CFR China, whilst SEA spot ethylene prices fell $20/ton from last week to be assessed at $970/ton CFR Southeast Asia as of May 15. NEA and SEA spot propylene prices were flat from last week, and assessed at $850/ton CFR China, and $830/ton CFR SEA as of May 15.

Southeast Asia’s supply tightens further with ROC, MOC issues

Southeast Asia’s olefins supply will stay tight amid ongoing planned and unplanned shutdowns into May and June.

A fire at a chemical tank in Map Ta Phut port, Rayong last Thursday led to SCG Chemicals declaring force majeure on all petrochemical products by May 10. SCG Chemicals owns two crackers at Map Ta Phut, the Rayong Olefins (ROC) cracker and Map Ta Phut Olefins (MOC) cracker. The Thai producer did not elaborate on the crackers’ production status but stated that the (fire) impact’s magnitude is under assessment.

The Rayong Olefins cracker produces 900,000 tons/year of ethylene and 450,000 tons/year of propylene, located at Map Ta Phut. The Map Ta Phut Olefins cracker produces 1.2 million tons/year of ethylene and 850,000 tons/year of propylene.

Additionally, Philippines’ JG Summit also shut its Batangas naphtha cracker on May 9 following technical issues. The cracker produces 480,000 tons/year of ethylene and 240,000 tons/year of propylene. The cracker is expected to restart this week, according to industry sources.