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(Bloomberg) -- Profits from making ethylene may be capped in Asia next year after
Chinese production jumped to the highest level in eight months.
The net return from producing ethylene by putting naphtha through a cracker
is $150 a metric ton, according to Chemical Markets Associates Inc. It was $250
a ton in July, after a fire at Formosa
Petrochemical Corp.’s No.1 cracker in Taiwan reduced supplies. The
profit may drop to $100 by January as new plants in Asia ramp up utilization
rates.
China, the world’s second-biggest crude consumer, is buying less ethylene as
it boosts domestic production after a 42 percent jump in oil-refining capacity
in five years. Manufacturers in South Korea and Taiwan count on China to buy 80
percent of their ethylene-based exports.
“There’s still supply pressure from new crackers,” said Suppata Srisuk, an
analyst at Bualuang Securities Pcl. “Most of the crackers in Korea and Japan
will be the first group to shut down if the ethylene spread gets too
low.”
mrcplast.com
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