Good Timing
Ethylene manufacturers are anticipating good business as petrochemical plants at home and abroad kicked off their regular maintenance for the second quarter. The over-demand for ethylene is expected to continue to the second half of this year, with the price of ethylene going up due to the recent increase in petroleum prices.
According to industry sources, a total of 16 petrochemical plant maintenance projects are scheduled for this year in Asia, and nine of them are happening between April and June. The combined annual ethylene production capacity of the nine plants located in Korea, China, Japan, and Taiwan amounts to 6.2 million tons. This means that the ethylene supply shortage in the region is likely to be exacerbated.
The ethylene price recorded US$1,458 per ton in January last year, but dropped to US$900 or so in February this year due to the plummeting oil prices and supply glut. Still, it rebounded to US$1,300 at the end of March, with the oil price rallying from late January.
Ethylene manufacturers running their own naphtha cranking centers are pleased with the situation. The rising ethylene price has caused a difference between the ethylene and naphtha prices, to reach as high as US$800 per ton. In general, business conditions are considered to be favorable when the spread is at least US$400.
“An ethylene-naphtha spread of over US$800 per ton has been very rare, and this implies the companies running naphtha cranking centers are ready to beat the recession,” the Korea Petrochemical Industry Association explained, adding, “In addition, large-scale NCC maintenance projects are predicted to follow one another in the region, with few expansion projects scheduled, so the recovery can pick up speed.”