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Asian Ethylene Market Grapples with Tight Supply, High prices as Lotte Chemical Delays Restart of Fire-Hit Naphtha Cracker to November

Northeast Asian Ethylene market could see a sharp rise in the Ethylene prices with certain market uncertainties hitting the doorstep, heightened by Naphtha cracker shutdown of the South Korean giant- Lotte Chemicals Ltd. The spread between CFR NE Asia Ethylene and CFR Japan Naphtha rose to USD 424 per MT on July 20, up by USD 3.25 per MT on the day. The rise in prices is attributed to supply tightness hovering over the Asian Ethylene market which is likely persist in the current fiscal, hit by the upcoming turnarounds of four crackers - SP Chemical Taixing, Formosa Mailiao, Idemitsu Tokuyama, and YNCC Yeochon -scheduled between July-end to October. South Korean giant Lotte Chemical delayed the restart of its fire-hit Naphtha-fed steam cracker located in Daesan to mid-November, from the pre-decided October. The petrochemical player had to shut its Naphtha cracker after an explosion at its Daesan plant on March 3rd this year, which injured nearly 31 people. Lotte runs two naphtha crackers in the region, one in Daesan and other in the southwestern city of Yeosu. The company’s Daesan Naphtha cracker unit can produce up to 1.1 MMTPA of Ethylene, while the other steam cracker holds the Ethylene capacity of 1.2 million tpy and is currently operating at more than 100% capacity due to sharp gains in the petrochemical margins.  As per the company sources, the cracker restart may be delayed beyond November if needful, but the company is assuring to restart the cracker normally by the end of 2020. Naphtha traders reported that the petrochemical maker imports around 75,000 -125,000 tonnes of Naphtha in a month for its Daesan cracker.