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Olefins producers in Asia unable to compete with counterparts in Middle East

November 05/2010

(Plastemart) -- Olefins producers in Asia are finding it increasingly difficult to compete with their counterparts in the Middle East. Ethane-based ethylene production costs in Saudi Arabia are around US$200/MT, US$250/MT in Qatar and US$615/MT in the US while naphtha-based ethylene production costs in Asia currently stand at US$1000/MT.

Ethylene producers in Japan and South Korea have seen depleting margins in the past two weeks. Since their rates are not competitive enough for spot ethylene cargoes, they are directing all their ethylene to downstream plants. As Middle East producers balance domestic demand for natural gas with that in their steam crackers, the feedstock is becoming increasingly costlier for the ethylene producers. However, the feedstock prices still do not compare with those in Asia.

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