Asian ethylene makers have not profited recently

According to Dow Jones News last week, due to the continued supply of abundant oil and the persistently high international crude oil prices, the profit outlook for ethylene producers in Asia will be poor for at least the next two months.

Although several ethylene producers in Asia have already cut production in early March, profits have not recovered to levels in January and February. This is because the Middle East continues to provide large quantities of natural gas-based ethylene cargoes to the Asian market. In the next two months, there will be more ethylene cargoes in the Asian market. The production capacity of naphtha cracker in South Korea's Lotte Dashan Petrochemical Company will increase by more than 50% to 1 million tons per year. In the next two weeks, Japan's Mitsubishi Chemical Corp. may restart its second naphtha cracker with a capacity of 476,000 tons/year. The device was located in Kashima, Japan and was closed on December 21 last year due to a fire.

With the exception of Thailand, the production of ethylene in most parts of Asia uses naphtha as the raw material, and naphtha as the raw material for crude oil. Therefore, the continuous rise in international crude oil prices has affected the profitability of ethylene producers.

At present, ethylene prices in Northeast Asia have fallen by US$200/tonne compared with one month ago. However, due to soaring prices of international crude oil futures, the Japanese naphtha market price rose by about 58 US dollars from a month ago, reaching 914.5 U.S. dollars per ton. As a result, ethylene producers have fallen into an awkward position with a loss of US$171 per ton of ethylene produced. This situation is difficult to alleviate in the case of persistent oversupply.

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