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Upside for Asia olefins limited on fewer turnarounds

November 25/2011

(ICIS) -- The gains in Asias olefins market may be capped next year because of a lighter 2012 cracker turnaround schedule and concerns over the health of the global economy, market sources said on Friday. Around 16 crackers in the region are scheduled for maintenance in 2012 compared to 33 crackers in 2011.


Based on the nameplate capacities of these crackers, the ethylene production loss is estimated to be at least 865,534 tonnes in 2012, down by more than 50% from levels seen in 2011, according to ICIS.


The market outlook for the ethylene and propylene markets in 2012 is generally bearish, particularly in the first quarter as the Lunar New Year holidays will arrive earlier on 23 January 2012, market sources said. January business is basically dead. Hopefully demand will pick up in February for March cargoes, a regional olefins trader said.


With the exception of South Korea, crackers in Asia are being operated at reduced rates of 80-90% this month as producers are squeezed by high feedstock naphtha costs and the earlier sharp falls in olefins prices.


South Korean producers are still running their crackers at close to full tilt except for SK Energy, which is operating its 190,000 tonne/year No 1 cracker in Ulsan at 70% capacity this month.
Ethylene margins of producers in northeast Asia based on naphtha feed fell into negative territory at the end of October, but the losses have narrowed in recent weeks partly because of a modest recovery in ethylene, propylene and butadiene (BD) prices, according to ICIS data.


Perspectives of development of the polymers markets, pricing issues and other important aspects will be discussed at The Polymers Summit-2011, which will be held in Moscow on November 30, 2011 at the Ritz Carlton Hotel. The Summit is organized by MRC with the support of ICIS. The main idea of the Summit is to find a "the golden mean" between producers and converters. When producers receive exactly such margin of production, which helps them to invest in production expansion in order to substitute polymers imports, and the converters receive such price of feedstock that helps them to compete imported finished products. The Summit site gives an access to the live video of the Summit, speakers" presentations, as well as opportunities to ask questions or make appointments to any Summit partcipant.


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