In Asia naphtha spot prices are likely to fall sharply this week

(ICIS) -- Asia's naphtha spot prices are likely to fall sharply this week, with crack spreads and inter-month spreads already weakening amid surplus, squeezed margins and falling prices for key petrochemical products, traders said on Monday.

Continued deceleration in China, the world's second biggest economy, sparked worries over the plastic demand outlook for next year. In response to the bearish situation, some regional producers have begun to rein in operating rates.

⌠The market is bearish currently. The market will be weak until the end of the year. The economic policy of China, in terms of financing, will be important, said a trader in northeast Asia.
The open-spec Asian naphtha contract for the first half of December fell by $18.50/tonne (┬13.14/tonne) from Friday's close to $858.00-861.00/tonne CFR (cost and freight) on Monday midday, partly because of weaker global crude futures ahead of the G20 summit later this week, ICIS data showed.

The naphtha crack spread versus December Brent crude futures plunged to $30.38/tonne on 25 October, the weakest since 8 January 2009. The crack spread was assessed at $36.50/tonne on Friday versus $64.28/tonne on 21 October, the data showed.

The spread between the contracts for the first half of December and the first half of January weakened to a contango of $2/tonne on Friday, as compared a backwardation of $2/tonne in the week earlier.

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(ICIS) -- Three of Nan Ya Plastics' four monoethylene glycol (MEG) units at Mailiao will again have to shut down, one after the other, starting 30 November, for safety inspections, a company spokesperson said on Monday. Nan Ya is a unit of Taiwanese petrochemical major, Formosa.
The planned shutdown of the MEG units is part of the Formosa group's agreement with the Taiwanese government. following a series of fire incidents that occured at the petrochemical site since July last year, said David Tsou of Nan Ya Plastics.

The company's 360,000 tonne/year No 2 MEG unit will be taken off line on 30 November, followed by the No 3 unit, which also has a 360,000 tonne/year capacity, at the end of this year. The 720,000 tonne/year No 4 unit, meanwhile, will be shut in March 2012, Tsou said. ⌠Only the No 1 unit will not be shut for safety inspections, said the Nan Ya spokesperson. No definite timeline was set on how long the safety checks will last.

The No 1 and No 3 units that each has a 360,000 tonne/year capacity are currently undergoing maintenance. The No 1 unit is expected to come back on stream on 2 November, while the No 3 unit will resume operations on 16 November, Tsou said.

Taiwan's Ministry of Economic Affairs (MEA) has approved a plan submitted by the Formosa Plastics Group to suspend operations at its petrochemical facilities in Mailiao in phases before resuming full operation by August next year, according to Tsou.

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(ICIS) -- The US October phenol contract settled at a drop of 9.23 cents/lb ($203/tonne, ┬142/tonne) at 73.08-77.53 cents/lb FRT EQ (freight equalised), as assessed by ICIS. The drop was based mostly on the 68 cent/gal fall in feedstock October benzene, as most US phenol contracts are tied to benzene.

Most freely negotiated contracts also fell by 9.23 cents/lb, flat with benzene-based formula contracts.
That formula-based and freely negotiated contracts settled flat with each other shows that the US phenol market has softened, as freely negotiated contracts were settling at a premium to formula-based contracts during the summer.

The biggest reason for the softness in the US phenol market has been slower demand from most markets, as downstream buyers are looking to destock inventory ahead of end-of-the-year taxes.
Sources said they also have not seen the typical winter holiday buildup and boost in demand, especially from Asia.

Several US producers said they have started to adjust their operating rates to account for the softer domestic and export demand. With producers running full-out for much of 2011, supply is also slightly longer than normal, sources said.


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(Plastemart) -- South Korea's second-largest refiner - S Caltex Co. has completed a polymer compound plant in Suzhou, Jiangsu Province, eastern China. Commercial operations have commenced with an annual output of 37,000 tons of polymer compounds widely used for making cars and home appliances. With this, GS Caltex aims to capture a 7% share of the fast-growing Chinese market for polymer compounds.

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(Lanxess) -- Macrolex colorants from Lanxess have once again proven themselves in the plastics sector: The renowned U.S. legal firm Keller & Heckman LLP based in Washington, D.C., has certified that Eastman Tritan colored with Macrolex colorants meets the requirements of the United States Food and Drug Administration (FDA). Their opinion is based on results from trials and extensive toxicological testing. Specialty chemicals company Lanxess worked with Eastman Chemical Company, manufacturer of Tritan, in selecting 10 Macrolex colorant grades to demonstrate their specific suitability for coloring the copolymer.

Eastman Chemical Company, a U.S. based company with operations around the world, is the leading manufacturer of polyester plastic for packaging. In 2007, Eastman launched a polymer called Eastman Tritan that balances the properties of clarity, toughness, dishwasher durability and high heat and chemical resistance. An additional bonus is that it is free of bisphenol A (BPA).

Macrolex colorants meet numerous legal conditions for use in food packaging and toys. They make it possible to achieve excellent results in coloring amorphous polymers. Coloration can range from transparent to full coverage, depending on the polymer and combination of colorants. Other benefits are high color intensity, outstanding brilliance, very good weather resistance and lightfastness and excellent heat stability.

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