NE Asia Ethylene Heads Southeast on Weak China Demand

SINGAPORE (ICIS news)--China’s weak demand for ethylene has paralysed trading activity in northeast (NE) Asia and cargoes have started heading towards the southeastern part of the region, where the material currently commands better prices, market sources said on Wednesday.

“The cargoes have all gone to southeast Asia,” said a Taiwanese buyer in Mandarin.

Talks with traders had lapsed due to a wide buy-sell gap, he added. 

Selling ideas were pegged at up to $1,020-1,030/tonne (€714-721/tonne) CFR (cost and freight) NE Asia for cargoes arriving in September while buying ideas in the region hovered in the low to mid $900s/tonne CFR NE Asia, market sources said.

The lack of demand from China – Asia’s largest importer of ethylene – had left the northeast Asian market without direction over the past three weeks, they said.

End-users in the country were sufficiently covered as domestic crackers were running at high operating rates averaging 90-100%, industry sources said.

Shanghai Secco Petrochemical was running its newly expanded 1.2 m tonne/year cracker in Caojing at close to full rates, market sources said.

Impending cracker start-ups had also contributed to expectations of ample domestic supplies and Chinese buyers had no incentive to seek spot cargoes, they added.

Fujian Refining and Petrochemical Co (FREP) is expected to start up its new naphtha cracker – an 800,000 tonne/year facility in Quanzhou, southern China by the end of the month.

Spot ethylene prices slipped $10/tonne at the top-end of the range to $950-970/tonne CFR NE Asia last week due to limited buying interest, according to data from global chemical market intelligence service ICIS pricing.

Prices in southeast Asia, on the other hand, rose $20-40/tonne to $1,030-1,060/tonne CFR over the same period, based on the same data.

Demand was comparatively healthier in southeast Asia partly due to the continued delays in the delivery of term cargoes from Iran due to cracker shutdowns early this month.

Iran is the largest Middle-eastern supplier of ethylene to the region. It exported 680,000-700,000 tonnes of ethylene in 2008 but sales volumes are expected to fall to 450,000-500,000 tonnes this year due to planned and unplanned cracker outages.

Gas feedstock shortage at Assaluyeh in southern Iran had also capped plant operating rates at 50-60% for the most part of 2009, traders said.

During the week, a 3,500-tonne ethylene cargo was heard sold on formula to a buyer in Indonesia for loading in the first half of September from Japan or Korea.

Spot supply from Korea was limited with bulk of its ethylene output being fed into derivative polymer plants that were running hard on the back of healthy export demand but Japan has cargoes available due to turnarounds at downstream plants in September and October, market sources said.

Discussions between producers and traders were heard in the low $900s/tonne on FOB (free on board) basis although some market participants said there had been deals done below these levels.

“September is (the end of) the first half accounting period in Japan so inventories should be reduced,” said a domestic producer currently in talks to sell some spot ethylene cargoes.

quoted from: ICIS.com

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Al-Waha to Achieve Commercial PP Output at Al-Jubail in Q4

SINGAPORE (ICIS news)--Saudi Arabia’s Al-Waha Petrochemical Co expects to achieve commercial production at its new polypropylene (PP) plant at Al-Jubail in the fourth quarter of 2009, a source close to the company said on Tuesday. 

The 450,000 tonne/year plant had already begun trial runs but it would be a few months before all the performance tests were completed, the source added.  

Company officials were not available for comment.

“This is the world’s largest PP unit using LyondellBasell’s Spherizone technology, hence it’s taking a long time to achieve commercial production,” the source said.

The plant is sourcing propylene from a 450,000 tonne/year propane dehydrogenation (PDH) unit. “The PDH unit is currently running at low rates, but the rates will be stepped up once the PP plant achieves commercial output,” the source said.

The PP plant would produce homopolymer as well as impact and random copolymer PP grades, the source added.

“The company is currently exporting on-spec and off-spec product to Middle East markets, but will start exporting to Asian markets once the plant starts producing significant volumes of on-spec product,” the source said.

Al-Waha Petrochemical is a joint venture between Sahara Petrochemical Co and LyondellBasell.

quoted from: ICIS.com

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Deep Sea Propylene Arbitrage to Asia Shuts for June Delivery

SINGAPORE (ICIS news)--The arbitrage for deep sea propylene cargoes to Asia has firmly shut for June delivery amid falling regional prices and market uncertainty, trade sources said on Monday.

Asia had in the past few weeks soaked up excess supplies from around the globe as manufacturers sold off surplus propylene amounting to 33,000-40,000 tonnes in the face of declining demand, traders said.

Last week, a Brazilian cargo of around 8,000 tonnes was sold to regional buyers in southeast Asia at a significantly lower price of $765/tonne (€574/tonne) CFR (cost and freight) for end June delivery, which effectively sealed the arbitrage shut, sources said. 

It was the latest and possibly the last deep sea parcel sold into Asia from a string of arbitrage cargoes from various origins such as Spain, Italy, the US, Libya and Brazil, which were bound for Asia between end-April and early June.

With import prices in China and southeast Asia poised to fall further below $800/tonne CFR southeast (SE) Asia as a result of the latest Brazilian cargo spot sale, most traders said it was an uphill task bringing in fresh deep sea parcels.

“No way,” said a Singapore-based olefins trader with regards to whether arbitrage cargoes from Europe or the US could still be sold into Asia.

He said the cost of bringing such eastbound cargoes from Europe to Asia would be around $830/tonne CFR SE Asia and that there were no “desperate sellers” in the market.

“If things are bad in Europe, then (propylene) prices can get cheaper,” said another Singapore-based olefins trader, who added that “as off now, I think not yet.” 

Rising US domestic prices for May were also said to be sealing the arbitrage shut, with producers nominating May contract increases of 3 cents/lb ($66/tonne) on the back of tight supply and higher refinery-grade propylene (RGP) spot prices, which were posted between US 25-25.87 cents/lb ($550/tonne).

Freight costs remain on the high side with exports from the US to Asia around $290-300/tonne for a 9,000-tonne parcel. Similarly, spot freight from Europe to Asia was pegged around $260-270/tonne for 6,000-7,000-tonne parcels, said a shipping broker in Singapore.

Asian propylene spot prices, as of week ending 1 May, fell as much as $70/tonne to hit a low of $790/tonne CFR China for June discussions due to strong buyer resistance.

quoted from: www.ICIS.com

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No Upside for Asia Ethylene Despite Formosa Blast – Analysts

SINGAPORE (ICIS news)--Asian ethylene may not get much boost as the likely delay in restarting Formosa Petrochemical Corp’s 700,000 tonne/year cracker in Mailiao following Monday’s blast will not create a supply shortage, petrochemical analysts polled by ICIS news said on Tuesday.

The explosion caused by a hydrogen gas leak at FPCC’s No 1 cracker overnight may push back the restart date of the cracker from the original schedule of 5 March, said an industry source.

The Taiwanese producer was supposed to restart its No 1 cracker this week as its 1.2m tonnes/year No 3 cracker will have to be shut on mechanical problems on 7-8 March.

“There is still no real demand for petrochemicals. Since they are going to run No 3 indefinitely now, there should not be much of an impact to ethylene prices,” said Samuel Lee, a petrochemical analyst at London-based bank HSBC.

FPCC’s No 1 cracker was taken off line in early January in a bid to reduce excess supplies in the face of weak demand. 

Lee said he expects ethylene prices to be flat or slightly lower next week due to falling downstream polyolefin values.

“700,000 tonnes/year is less than 1% of the global capacity for 2009 and is 17.5% of excess supply,” said Sutthichai Kumworachai, an analyst with brokerage KGI Securities. 

Global capacity for ethylene in 2009 is more than 132m tonnes, according to data from ICIS pricing.

“People are very concerned about the near-term weakening demand,” Kumworachai said, adding that Thailand’s PTT Chemical’s (PTTCH) share prices have fallen 10% in Tuesday’s morning trade.

“The spread of ethylene has been very narrow. Olefins are generally the most vulnerable products to down-cycles,” Kumworachai said. 

The current naphtha-ethylene spreads have already weakened 20% from last week’s $187/tonne (€148/tonne), he added. Naphtha is the feedstock for producing ethylene.

Buyers would likely resist higher prices for ethylene given new capacities coming up in the Middle East and weakening demand outlook, said Naphat Chantaraserekul, senior investment analyst at brokerage Kim Eng Securities.

Ethylene spot prices fell to a one-month low of around $630-650/tonne CFR (cost and freight) northeast (NE) Asia last week as softening derivative markets capped demand for the monomer, according to global chemical intelligence service, ICIS pricing.

Traders said the end-users had retreated to the sidelines as they were already covered for March, but prevailing high naphtha feedstock costs could make it attractive for producers to buy ethylene.

quoted from: www.ICIS.com

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Thai PTTCH Margin May Fall, to Shut Units in Q3

PTT Chemical PCL, Thailand's largest olefins marker, said on Tuesday it expected 2009 revenue to rise 7% to THB88bn ($2.5bn), better than analysts' forecasts, due to higher capacity.

PTTCH, a flagship in the olefins petrochemical business of top energy firm PTT PCL, did not expect margins between product prices and feedstock to be as good this year as last, President Veerasak Kositpaisal said.

"Spreads this year should stay at a good level, but it can't be compared to last year. We had already expected this year to be the downturn for the petrochemical sector, while new supplies from the Middle East will enter the market," he told reporters.

Twelve analysts polled by Reuters Estimates forecast a 7% fall in revenue in 2009.

PTTCH planned to shut down its olefins plant and a high-density polyethylene (HDPE) plant temporarily in the third quarter, he said, without giving reasons for the shutdown.

The company planned to invest THB39.7bn during 2009–2013, of which THB25bn would be spent this year to boost olefins capacity by 100,000t a year and propylene by 50,000t a year, he said.

PTTCH produces ethylene and propylene, together called olefins, petrochemicals used to make plastic pellets for packaging and other industries. PTT supplies gas to the company.

After the expansion, the company's annual olefins capacity will rise to 2.89 million tonnes in 2010 from 1.7 million tonnes, and HDPE capacity to 830,000t from about 500,000t.

The company is also on track to build an ethane cracker with annual capacity of 1 million tonnes, and a linear low density polyethylene (LLDPE) plant, expected to be completed by the fourth quarter of this year, Veerasak said.

Despite the overall downward trend, he said demand had picked up in the first quarter as clients had run out of inventories after cancelling buying orders in the fourth quarter.

Based on an assumption of crude prices above $40 a barrel this year, prices of naphtha, a key raw material, were expected to be $400–410 a tonne, while olefins prices should be around $600–700 a tonne, he said.

The spread between naphtha and key product HDPE was expected to be $400–500 a tonne this year, he added.

Last week, PTTCH reported its first ever quarterly loss for the fourth quarter of 2008 due to a sharp drop in product prices that led to inventory losses and a lower production rate.

At the midday break, PTTCH shares were down 0.83% at THB29.75, while the overall Thai market was 1.4% lower.

By Pisit Changplayngam, Reuters.
quoted from: www.chemicals-technology.com

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IPIC-Nova Tie-Up Would Reap Polyolefin Synergies – Sources

SINGAPORE (ICIS news)--The acquisition of NOVA Chemicals by Abu Dhabi sovereign wealth fund the International Petroleum Investment Co (IPIC) would yield strong synergies in the companies’ polyolefin assets, sources close to the companies said on Tuesday.

IPIC had revealed plans to buy Canadian petrochemicals producer NOVA in a $2.3bn (€1.8bn) deal worth $6/share, a premium of almost 3.5 times higher than the company's Friday close on the New York Stock Exchange. 

The synergy between the two companies on feedstocks was quite strong, with both having access to competitively priced gas, sources said. Equally strong was their synergy on technology, the sources added. 

NOVA is a major polyethylene (PE) technology licensor, while Borealis, of which IPIC is a major shareholder, has Borstar PE and polypropylene (PP) technologies.

The acquisition of NOVA would also increase IPIC’s footprint in North America where it had only a marginal presence through its shareholding in Borealis, one of Europe’s largest polyolefin producers, according to the sources. 

Borealis has only compounding facilities in North America but NOVA operates two gas-based PE plants in Canada with a 1.68m tonnes/year combined capacity. They produce various PE grades, including metallocene and roto moulding linear low density PE (LLDPE).

IPIC’s existing small presence in North America could also mean that NOVA's operations in the region were unlikely to change significantly after the acquisition, one of the sources said.

IPIC holds a 64% stake in Borealis with OMV Aktiengesellschaft, the European oil and gas group, holding the balance of 36%. 

The acquisition could also enable IPIC, through its ownership of Borealis, to expand its portfolio in the Middle East to include metallocene LLDPE, the same source said.

"Borouge [which is co-owned by Borealis] is likely to build a metallocene LLDPE plant in Abu Dhabi based on NOVA Chemicals' technology, if the acquisition comes through," the source added.

Borealis and the Abu Dhabi National Oil Company (ADNOC) are joint venture partners in Borouge, a polyolefins producer in Abu Dhabi. 

NOVA has no production facilities in the Middle East but Borouge runs a 600,000 tonnes/year high density polyethylene (HDPE)/LLDPE swing plant in Abu Dhabi that produces mainly HDPE pipe, film and cable grades.

NOVA had previously looked for a presence in the Middle East and took part in negotiations with Qatar Petroleum several years ago. Being acquired by IPIC was in line with these aspirations, a second source said.

Borealis and Borouge currently have a 3.6m tonnes/year combined PE capacity globally.

Borouge is in the process of expanding its Abu Dhabi facilities, which will double its PE capacity and bring on stream a new 800,000 tonnes/year polypropylene (PP) plant after completion next year.

NOVA's styrenics business, which was spun off into joint venture Ineos Nova Chemical Corp, had some synergy with Borealis and Borouge, according to a third industry source.

"Borealis and Borouge are both application-oriented companies, who are trying to offer solutions to their customers in segments such as packaging and automobiles," he said. "Adding styrenics to their polyolefins portfolio can actually add value to these solutions."

IPIC would be able to exercise its buy option in NOVA if there were no other interested bidders by the end of May, the first source said.

By Chow Bee Lin and Prema Viswanathan

source: www.ICIS.com

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Saudi Arabia's Yansab Delays Start-up of Yanbu Cracker

SINGAPORE (ICIS news)--Saudi Arabia's Yanbu National Petrochemical Co (Yansab) will not keep to the planned start-up schedule for its new cracker complex in Yanbu, a source close to the project said on Thursday.

The complex was scheduled to come on stream by the end of the first quarter of this year, after missing an earlier deadline in the fourth quarter of last year.

"The project will definitely be delayed [beyond the first quarter], but no information is available on the new start-up date," the source said. No reasons were given for the delay. 

Company officials were not available for comment.

Besides a 1.3m tonne/year cracker, the complex includes polyethylene (PE) and polypropylene (PP) plants with capacities of 900,000 tonnes/year and 400,000 tonnes/year respectively. 

A 700,000 tonne/year monoethylene glycol (MEG) plant, which is part of the complex, started test runs earlier this week. 

Saudi Basic Industries Corp (SABIC) is the main shareholder in Yansab, with a 51% stake. 

Yansab's 35% share is publicly traded on the Saudi stock exchange, while the rest is distributed between 17 Saudi and other Gulf Cooperation Council (GCC) companies.

source: www.ICIS.com

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Fragile Demand May Cap Asia Ethylene Rebound

SINGAPORE (ICIS news)--Recent gains in Asian ethylene spot prices may soon end amid weakening demand downstream, as new polyethylene (PE) and monoethylene glycol (MEG) exports from the Middle East emerge in the second quarter, industry sources said on Thursday.

The start up of nine new crackers in China and the Middle East this year (see table below) and the onslaught of the global economic downturn have made it difficult to predict the outlook for ethylene and its derivatives despite a rebound in petrochemical prices since the start of 2009.

In mid-February, Rabigh Refining and Petrochemical Co (PetroRabigh) will start up its 1.25m tonne/year facility in Rabigh, located at the Red Sea coast of Saudi Arabia.

Derivative products such as PE and MEG are slated to be shipped out to Asia from Saudi Arabia starting end-March, igniting worries that prices in this region would come under pressure from the influx of cargoes from the Middle East.

“If (Rabigh) starts exporting PE to Asia, fundamentally and psychologically, PE prices would come down,” said a Japan-based olefins trader.

A fall in derivative pricing, particularly PE, is expected to derail demand for ethylene, which had risen to a four-month high of $700/tonne (€ 539/tonne) (CFR) northeast (NE) Asia level in early February – a level not seen since 17 October 2008 – as importers and end-users replenished stocks after the lunar new year holidays in late January. 

China's measures to stimulate the domestic economy through ensuring ample liquidity could also have contributed to the price gains.

In contrast, ethylene had slumped to a five-and-a-half year low of $350-410/tonne CFR NE Asia in late November last year as the global economic crisis unfolded.

The price recovery, however, could be short-lived due to strong resistance to offers above $700/tonne CFR Asia amid uncertainty over the price outlook for ethylene derivatives.

“Based on today’s margins, we can accept ethylene at $700/tonne but come April, things could turn around quickly,” said a southeast Asian-based PE producer.

Some market participants said an anticipated reduction in demand from China – Asia’s largest importer of ethylene – partly due to new crackers coming on stream this year – would also cap gains for ethylene.

The country imported 721,204 tonnes in 2008, representing a 41 percent increase from 2007 volumes of 509,821 tonnes.

“It won’t be easy for ethylene prices to keep going up due to new start-ups in China,” said an olefins trader in South Korea, which is a main ethylene exporter to China.

Tough decisions could loom ahead for naphtha-based cracker operators in Asia, who may have to consider trimming operating rates. 

Regional producers had scaled back ethylene production to 70-80% of capacity in October and November 2008 due to the deepening economic crisis, which had hurt exports of finished goods.

As of February 2009, most of the crackers in Asia were running at 85-100%. The exception was in Japan, where poor domestic demand has made it tough for crackers to operate above 80%.

“It's very difficult to load up after the new crackers in the Middle East come up. I guess we'll have to load down again,” said a Korean producer. “The Middle East operations and world economy situation have made it very challenging for operators this year.”

Cracker projects on stream in 2009  

- Rabigh, Saudi Arabia, "Rabigh Refining and Petrochemical Co ", Cap. 1,250,000; Start Up "Mid-Feb"

- Yanbu, Saudi Arabia, "Saudi Yanbu National Petrochemical Co", Cap. 1,300,000: Start Up "Q1"

- Quanzhou, China, "Fujian Refining and Petrochemical Co", Cap. 800,000; Start Up "April" 

- Al Jubail, Saudi Arabia, "Eastern Petrochemical Co (Sharq)", Cap. 1,300,000; Start Up "Q2" 

- Ras Laffan, Qatar, "Qatar Petrochemical", Cap. 1,300,000; Start Up "Q3"

- Panjin, China, "Liaoning Huajin Tongda Chemical", Cap. 450,000; Start Up "Aug" 

- Xinjiang, China, "Dushanzi Petrochemical", Cap. 1,000,000; Start Up "Q3" 

- Tianjin, China, "Sinopec-Sabic JV", Cap. 1,000,000; Start Up "Q4" 

- Zhejiang, China, "Zhenhai Refining and Chemical Co", Cap. 1,000,000; Start Up "Dec"

source: www.ICIS.com

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LyondellBasell to Mothball Texas Olefins Plant

HOUSTON (ICIS news)--LyondellBasell said on Thursday it would indefinitely idle its Chocolate Bayou olefins plant in Texas due to weak monomer demand amid the faltering US economy.

The company plans to cut about 220 jobs at the site, which is part of its Equistar subsidiary. 

"Current projections for ethylene demand indicate that we can meet the needs of our customers without this plant in operation," said Vaughn Deasy, LyondellBasell’s vice president of base chemicals.

Deasy said in a press release that the company could not maintain staffing at previous levels while the plant remains indefinitely idled.

LyondellBasell has 544,000 tonnes/year of nameplate ethylene capacity at Chocolate Bayou.

The company on 6 January filed for Chapter 11 bankruptcy protection in the US.

source: www.ICIS.com

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CNOOC Acquires HBON to Strengthen Downstream Business

Recently, CNOOC has wholly acquired the HBON (和邦) Chemical to strengthen downstream business in east China of the off-shore oil company.

CNOOC has completed the deal through its subsidiary in Zhejiang - CNOOC Ningbo Daxie Petrochemical Co. (CNOOC Ningbo Daxie). Now, HBON is the wholly subsidiary of CNOOC Ningbo Daxie. However, the financial details are not disclosed.

Located in Daxie island Zhejiang Province, CNOOC Ningbo Daxie is a jv between CNOOC, Hong Kong based Lewin (利萬) Group and NIngbo Beilun Power fuel Co. Among them, CNOOC has 51% shares.

CNOOC Ningbo Daxie has an existing 2 Mt/a refining facility and it will put on stream for another 6 Mt/a refining facility in late Feb. 2009, and make total refining capacity to 8 Mt/a. So then it will provide the feedstock for HBON facilities.

In Apr. 2008, the company started up its aromatics project. With total investment around USD100 million, the project has 250,000 ton/year BTX (Benezene 50,000tpa, Toluene 80,000tpa and Xylene 120,000tpa) capacity. By using UOP aromatics technology, the project can process heavy oil as a feedstock, and the BTX products will provide to East China Market. It also has a 2.4 million t/a heavy oil cracking unit, and a 1.7 million t/a distillate oil hydrofining unit.

HBON Chemical is located in Zhoushan, Zhejiang Province. Before the acquisition, HBON was a jv of Hong Kong based Deji Investment Company, Ningbo Hongbang Petrochemical and Ningbo Kaifeng Petrochemical. Deji Investment holds 60% stakes in Hebang and the other two companies hold the rest 40%.

HBON was impacted by the economic crisis, which dispersing in the Q4 2008 and makes the company difficult to operate the business. According to industrial sources, the potential competitive buyers include Sinopec, PetroChina and CNOOC, while CNOOC is the final winner.

Currently in East China market, the gasoline, diesel and aromatics product are mainly supplied by Sinopec and PetroChina, So, the acquisition of HBON will help CNOOC to strengthen its downstream business in this area.

source: http://kaznak.web.infoseek.co.jp

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Europe Markets Summary

LONDON (ICIS news)--Here is Thursday's end-of-day European oil and chemical market summary from ICIS pricing.

CRUDE: March WTI: $39.83/bbl, down $0.49/bbl. March BRENT: $44.37/bbl, up $0.22/bbl

The oil markets remained in positive territory for most of the session, with the Brent March contract trading within a $1/bbl range below the $45/bbl mark. Cold weather in the northern hemisphere and talks of more OPEC supply cuts have not been enough to outweigh the contraction in demand.

NAPHTHA: Open-spec spot cargoes were assessed in a $420-425/tonne CIF (cost, insurance and freight) NWE (northwest Europe) range, up $22/tonne on the buy-side of the range set earlier in the day. February swaps were pegged at $403-405/tonne CIF NWE. Three bids were heard during the afternoon. One bid was heard at $416/tonne CF Rotterdam for 15-19 February, and two at $420/tonne CF (cost and freight) Rotterdam for 18-22 February.

BENZENE: The benzene market fell notionally throughout the day, with players talking material for the first half of February at $365-375/tonne, and the rest of February $5/tonne higher on either side. March was notionally bid and offered at $380-400/tonne CIF ARA (Amsterdam, Rotterdam, Antwerp).

STYRENE: The styrene market was quiet, with bids and offers for February at $640-660/tonne and March offered at $650/tonne FOB (free on board) Rotterdam, turning the market more flat.

TOLUENE: Bids for February-loading cargo were heard this afternoon at $490/tonne FOB Rotterdam, but no offers were forthcoming. Bids and offers for February were also heard at $485-500/tonne CIF ARA, marginally up due to stronger gasoline values.

MTBE: In the afternoon, $580/tonne FOB AR (Amsterdam, Rotterdam) was offered on MTBE, coming down to $528/tonne FOB AR by the end of business. No bids emerged, but a notional bid level was pegged around $510/tonne FOB AR. Gasoline traded between $418-424/tonne FOB AR, pegging the factor for this bid/offer range between 1.22-1.25.

XYLENES: In the absence of any firm bids or offers this afternoon, values for February-loading paraxylene remained pegged at $790-810/tonne FOB Rotterdam.

source: www.ICIS.com

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Iran’s Arya Sasol to Shut Cracker for Maintenance Next Week

SINGAPORE (ICIS news)--Iran’s Arya Sasol Petrochemical is expected to shut its 1m tonne/year cracker at Assaluyeh for a month-long annual turnaround next week, a source close to the company said on Wednesday.

The turnaround includes a maintenance at the company’s derivative polyethylene (PE) lines, said the source without providing further details.

Arya Sasol, which is also known as Olefin No 9, is a joint venture of National Petrochemical Co (NPC) and South African chemicals giant Sasol.

Jam Petrochemical, which is wholly owned by NPC, operates a 1.32m tonne/year facility at the same site. The cracker is expected to remain in service during this period, the source said.

"Some portion of the lack of product from Arya Sasol will be compensated by Jam but it won’t be 100%," he said in response to questions on whether ethylene exports would be affected.

The current operating rate at the Jam cracker, at 50-60%, is expected to be raised during the Arya Sasol turnaround although the actual output would be determined later, he said. He added that ethylene contractual deliveries were likely to be maintained but there would be no more spot sales for February loading cargoes.

Some ethylene cargoes for export could also come from Marun Petrochemical if Bandar Imam Petrochemical Co (BIPC) successfully restarts its 400,000 tonne/year cracker in late February/early March after ongoing technical modification works to increase the unit’s nameplate capacity by 100,000-150,000 tonnes/year.

Marun, which runs a 1.1m tonne/year cracker at the same site, is currently supplying ethylene feedstock for BIPC’s derivative units, which include a 100,000 tonne/year low density polyethylene (LDPE) unit and a 60,000 tonne/year high density polyethylene (HDPE) unit.

The restart of BIPC’s cracker had been postponed three times since the cracker was taken off line in late October 2008.

source: www.icis.com

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Petro Rabigh to Start Up Cracker Mid-Feb

SINGAPORE (ICIS news)--Saudi Arabia’s Rabigh Refining and Petrochemical Co (Petro Rabigh) is expected to start up its 1.25m tonne/year cracker around mid-February, said a source close to the company on Tuesday.

On-spec product at the facility in Rabigh located on the Red Sea coast of Saudi Arabia should be available shortly after the start up if all goes smoothly, he added, without providing dates.

The company is also slated to start up its derivative 600,000 tonne/year monoethylene glycol (MEG) plant at the same site as planned at the end of the month.

Petro Rabigh is a $10bn joint venture between state-owned oil giant Saudi Aramco and Japan's Sumitomo Chemicals. A total of 23 plants producing 18.4 m tonnes/year of petroleum-based products and 2.4 m tonnes/year of ethylene and propylene-based derivatives make up the project, which was originally scheduled to start commercial production in the fourth quarter of 2008. The start up of some units was pushed back to early 2009 due to technical issues.

source: www.ICIS.com

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NOON SNAPSHOTS - Asia Markets Summary

03 February 2009 04:00 [Source: ICIS news]

SINGAPORE (ICIS news)--Here is Tuesday’s mid-day Asia oil and chemical market summary from ICIS pricing.

CRUDE: March WTI $40.35/bbl up 27 cents March BRENT $44.40/bbl up 58 cents.

Crude futures steadied in Tuesday’s morning trade despite dismal data from the US Energy Information Administration late last week. Production cuts of almost 4m bbl/day by OPEC since September 2008 were seen to be sinking into current crude values.

NAPHTHA: Asian naphtha prices opened softer Tuesday. Second half March price indications were pegged at $440.50-443.50/tonne CFR (cost and freight) Japan,first half April at $430.50-433.50/tonne CFR Japan and second half April at $422.50-425.50/tonne CFR Japan.

BENZENE: Discussions for March cargoes remained scant on Tuesday morning. An offer for any April loading at $405/tonne FOB Korea met a bid at $380/tonne FOB Korea.

TOLUENE: A bid for any March lifting at $540/tonne FOB Korea ensured that prices remained at $540-550/tonne FOB Korea on Tuesday morning. Otherwise, discussions for March and April were limited.

for more detail please visit: www.icis.com

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China to Seek up to 90,000t February Naphtha on Shortage

China, normally a net naphtha exporter, has emerged to seek spot cargoes of the petrochemical feedstock for February delivery to fill a shortfall in domestic production, regional traders said on Tuesday.

Traders estimated that the country could need 60,000–90,000t of naphtha to plug the gap, as its top refiners cut runs to their lowest in about two-and-a-half years due to slow overall fuel demand.

"Some of the naphtha has also been used as a gasoline blendstock, as sellers take advantage of the lucrative auto fuel prices," a Singapore-based trader said.

This has compounded the naphtha supply woes in China and the rest of Asia, prompting traders to say that the recent naphtha recovery ahead of the Lunar New Year could stretch beyond February into March.

"I don't usually get enquiries from China, but in the last two weeks, requests started streaming in (from Eastern China)," said another trader.

Naphtha crack spreads – premiums or losses obtained from refining Brent crude into the petrochemical feedstock – had rebounded strongly to $55.38 a tonne premium on Monday, versus a historical low of $189.75 discount on 4 November, when demand was in a slump, led by China's absence.

Strength to last to March

The world's second-largest energy consumer exported a total of about 1.46 million tonnes of naphtha between January and November 2008, and imported a total of 546,302t for the same period, or about 50,000t a month.

This reflects a surplus of 913,689t of the feedstock last year versus an excess of 670,789t for 2007.

Although a net exporter of naphtha, China faced sporadic shortages in August and November last year, official data showed.

In November, China's imports exceeded exports by 10,881t.

"It is very hard to tell how many cargoes China needs (for February), but it will definitely need more than 60,000t," the first trader added.

The second trader estimated that China could need about 90,000t of naphtha to fill the void.

These shortages came at a time when South Korean buyers are aggressively seeking spot barrels as they ramp up crackers' output to cash in on the Lunar New Year festive demand. Overall, cracker output in South Korea – which has a total nameplate capacity of about 7.3 million tonnes of ethylene a year – were raised to an average of 90–95% compared to 70–75% in November.

Unlike earlier expectations, the strong naphtha demand could extend beyond the festive period.

"Demand could still be there in March, slowly tapering off in April," said an Asian seller, who added that a slump could follow from May, as the global economic crisis deepened. 

By Seng Li Peng, Reuters. (www.chemicals-technology.com)

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Sinopec Group's Ethylene Output Falls to 2006 Level

State-owned Sinopec Group's ethylene production in 2008 fell to levels last seen two years ago as it cut output to boost fuel supplies ahead of the Olympics and curbed operation later on slumping chemical demand.

The group, which runs most of its key businesses via listed Sinopec Corp, said it produced 6.35 million tonnes of ethylene last year, a volume 5.14% lower than in 2007 and roughly the same as in 2006.

China in recent years has been aggressively expanding its production capacity of ethylene, a key building block for plastics, synthetic rubber and chemical fibre, since local output was insufficient to meet booming demand fuelled by fast economic growth.

Sinopec had to jack up output of refined oil products and cut ethylene production to meet market demand when supply was tight because of political requirements, said Liu Junan, former president of a Sinopec thinktank.

Collapsing prices and demand for chemicals in recent months might have also eaten into its ethylene production, a Shandong-based analyst said.

Despite the growth of crude throughput slowed to 4.34% in 2008 from 5.91% in 2007, Sinopec's output growth of gasoline, diesel and kerosene picked up to 9.03% last year from 6.16% in 2007. 

Domestic sales of refined oil products totalled 123 million tonnes, the group said in a report on its website.

The volume was 3.4% higher than the 119 million tonnes of fuel sold in 2007.

Sinopec Group produced 41.8 million tonnes, or 836,000 barrels per day, of crude oil and 8.26 billion cubic metres of natural gas in 2008, the report said.

Based on earlier company figures, oil output was 1.75% higher than in 2007 while natural gas production was 3.25% more than a year earlier.

It said that overseas equity oil, output it entitles from overseas oilfields, totalled at 9 million tonnes last year, the same as earlier plans. 

By Jim Bai, Reuters. (source: www.chemicals-technology.com)

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Higher European Cracker Rates Boost Demand for Spot Naphtha

london (Platts) -- 19 Jan 2009

An increase in European steam cracker rates this month has led to a slight rise in naphtha buying interest, although underlying demand for petrochemical products has yet to demonstrate a sustained recovery from recent depressed levels, market sources said Friday.

Several cracker operators reported an increase of around 10% in operational rates in January, when compared with December.

"Our crackers are running at around 85% now," one olefin producer said, while other sources reported utilization rates of 65-80% at their facilities. "Our plants are no longer at minimal technical tolerance levels as downstream demand has picked up a little," a source from one petrochemical major said.

Ethylene off-take for January was on average also up by around 10% from December, but was still around 25-30% down from normal consumption levels, market sources said.

"The cracker margins are still very poor...but I'm very optimistic for the second half of the year; the system is finding an equilibrium and slowly restarting," said another petrochemical producer.

Platts contract cracker margins have fallen sharply so far this year on lower olefin contract values to an average of $178/mt or Eur131/mt during the first 15 days of January, compared with an average of more than $1,500/mt in December.

With margins weak and naphtha prices rising so far this month, petrochemical producers are wary of emerging too strongly as buyers of naphtha. 

The recovery in petrochemical demand is still very modest, market sources said, with some adding that they were yet to be convinced that the current uptick in consumption was sustainable. 

"There is also some re-stocking going on now in the whole production chain, as inventories were driven to very low levels in December; I am still skeptical about the recovery of intrinsic downstream demand," an ethylene buyer said. 

"Demand is still pretty relaxed in NWE," one naphtha market source said, while another said he expected to see "more spot activity in the next three weeks." Some of the main naphtha buyers in Europe are now buying at full contractual volumes again, having been trying to minimize their commitments throughout the fourth quarter of last year, traders said.

"Petrochemical end-users might buy for H2 January-H1 February if they get the right price. They don't want to chase the market if the premiums are going up," another source said, describing the recovery as "tentative."

Some sources said the increased naphtha buying activity could also be due to the fact that some petrochemical producers have reduced their contract deliveries of naphtha for 2009 or have not signed any term contracts at all, forcing them into the spot market to secure supplies.

Some other olefin producers also sounded a note of caution, saying demand for petrochemical derivatives had not yet demonstrated sustainable strength to justify a marked increase in steam-cracking rates.

"We increase the rates and start running full blast now and then suddenly downstream demand collapses again and we have to go through the whole pain of reducing cracker rates again and it's a no fun, costly exercise," one olefin producer said.

--Ilana Djelal, ilana_djelal@platts.com --Maria Gradobitova,
maria_gradobitova@platts.com

Quoted from: www.platts.com

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