SE Asia ethylene market strengthens on tighter supply, fresh demand

SINGAPORE (ICIS)–Ethylene prices in southeast Asia are buoyed by tightening supply and fresh spot demand.

Spot availability for February-loading cargoes is curtailed by widespread operating rate cuts at regional naphtha-(liquefied petroleum gas) LPG crackers, as well as ongoing and upcoming cracker turnarounds in southeast Asia and the Middle East.

Several regional producers are undecided on whether to ramp up production in February as the current ethylene prices are still below  expectations. Uncertainty over the downstream outlook post-Lunar New Year holidays also led suppliers to be cautious.

There are no signs of a recovery in a major Singapore exporter’s operations yet. The company is still purchasing propylene for February delivery, suggesting that its production is likely to be still at reduced rates next month.

Output in southeast Asia and the Middle East will be affected by a series of cracker turnarounds commencing in late January.

Shipments from the Middle East to Asia will fall in February and March as a result of the planned maintenance.

Pengerang Refining and Petrochemical (PRefChem) in Malaysia may slow down exports if it restarts its monoethylene glycol (MEG) plant successfully.

Thailand’s PTT Global Chemical (PTTGC) which began scheduled maintenance this week issued a tender to purchase a second-half February arrival spot ethylene cargo.

Another Thai producer purchased spot supply for February following a reduction in its cracker run rates this month.

Spot buying in Indonesia is subdued ahead of the Lunar New Year holidays.

The post-holiday demand will depend on the performance of downstream markets.

Derivative polyethylene (PE) supply is expected to fall due to reduced operating rates at regional facilities and plant turnarounds in southeast Asia and the Middle East.

But the rising feedstock costs could hurt margins and output if they are not matched by increases in PE prices.

In the spot ethylene market  this week, a deal was concluded at $800/tonne CFR (cost & freight) southeast (SE) Asia for February arrival, although the majority of buyers capped their price indications in the mid-$700/tonne CFR levels.

Focus article by Yeow Pei Lin

Photo: Container cranes at the Port of Singapore. (By Wallace Woon/EPA/Shutterstock)