Asian Crackers Stick with Naphtha Despite Cheaper LPG As a Feedstock
Asian Crackers Stick with Naphtha Despite Cheaper LPG As a Feedstock

Asian Crackers Stick with Naphtha Despite Cheaper LPG As a Feedstock

  • 17-Jun-2022 6:28 PM
  • Journalist: Yage Kwon

Petrochemical crackers usually switch from Naphtha to LPG as an alternate cracker feedstock when they get better margins than using Naphtha as a feedstock. Now in the Asian region, especially the North Asian crackers get almost double digits discounts on LPG prices compared to Naphtha. According to ChemAnalyst’s sources, the switch to LPG as a feedstock has not been done by any of the Asian crackers (17-6-2022). The crackers are sticking with Naphtha as a feedstock primarily for two reasons. Firstly, weak market sentiments toward Ethylene discourage crackers from switching to Ethylene. Secondly, the demand for Gasoline blending products makes Naphtha a better feedstock option for crackers in the Asian region under current circumstances.

In Petrochemical crackers, when LPG is used as a feedstock, the yield percentage for Ethylene and propylene is greater by 56% and 38%, respectively, compared to the yield percentage when Naphtha is used as a feedstock. Pyrolysis Gasoline (PG), a byproduct of cracking when Naphtha is used as a feedstock, is in high demand in Asian markets due to octane shortage. So, the high demand for PG and cut-rate prices of Ethylene makes it a no-brainer for refiners to stick with Naphtha as a feedstock. Despite the high PG demand for Gasoline blending in the Asian market, crackers are lowering their run rates to improve their margins. The Lowered run rates will lower LPG demand from the crackers even further. According to another ChemAnalyst source, “Crackers will switch to LPG when the discount for LPG increases, but the current low running rates of crackers make it hard to change to the current scenario.”

According to ChemAnalyst, the strong demand for high octane gasoline blenders like PG and lower running rates (Especially in South Korea owing to the worker’s strike) makes Naphtha the optimal feedstock. So, the constant demand for Naphtha from the refineries keeps the price trend of Naphtha in the Asian market rising. Meanwhile, LPG prices, despite poor demand from refineries, are also witnessing an Upward price trend in the Asian market on account of high demand as a cooking fuel from the end-users (Asian households).

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