Production margins for ethylene manufacturers in North Asia transformed favorable on Monday at $9.25/ mt, the very first time since Might 23 in 2015, amidst dropping naphtha and also firmer ethylene area prices.

On March 15, CFR Japan naphtha was evaluated at a 10-month high of $1,088.13/ mt, but the cost has fallen to $1,043.75/ mt on Monday, down 4.1%.

Throughout the same period, CFR Northeast Asia ethylene costs have actually risen $113/mt or 8.8% to $1,403/ mt because of supply tightness in the middle of prolonged closure of Showa Denko's Oita vapor biscuit.

Japan's Showa Denko did not restart its naphtha-fed steam cracker as arranged on March 21 as a result of a technological problem with the air conditioning system at the complex.

The biscuit, which has the capability to generate 695,000 mt/year of ethylene as well as 425,000 mt/year of propylene, was closed March 10. It is now anticipated to reactivate only by the end of May.

Also, Taiwan's CPC needed to shut its naphtha-fed heavy steam biscuit April 6 following a fire at a pipe attaching a butadiene device to storage centers at its Kaohsiung refinery as well as petrochemical complex. CPC, nonetheless, reactivated early Monday the No. 5 heavy steam cracker with a design ability of 500,000 mt/year of ethylene as well as 250,000 mt/year of propylene.

WEAK DOWNSTREAM COULD PULL ETHYLENE MARGINS DOWN ONCE MORE

Yet how much time margins will continue to continue to be favorable relies on downstream need, which is weak such as for polyethylene. "It is extremely difficult [for PE manufacturers] to survive due to high costs," a North Eastern ethylene producer claimed.

biocides oil and gas was assessed at $1,375/ mt CFR Far East Asia on Monday, $28/mt listed below feedstock ethylene.

This means that for integrated manufacturers, it would make much better financial feeling to cut operations at their LLDPE plants and also sell ethylene in the spot market.

Operators would certainly remain to run naphtha-fed heavy steam crackers at high rates even if ethylene margins are poor to benefit from propylene and also butadiene rates, which are usually greater.

As an example, propylene was $1,480/ mt FOB Korea on Monday, while butadiene was assessed at $3,380/ mt FOB Korea on Friday last week.