Quarterly Update on Global Linear Alpha Olefins
For the Quarter Ending March 2021
Rigorous winter storm adversely affected the US Linear Alpha Olefins market, where the production was literally snapped off. Several olefins’ giants were forced to shut down their plants for weeks which led to a supply crisis across the US Market. Manufacturers like LyondellBasell, ExxonMobil, INEOS Olefins & Polymers and Formosa Plastics, were forced to shut down their plants. Apart from these big plants, around 30 plants also remained idled for many days. Firm demand and low supply opportune some manufacturers to increase their olefins prices. Likewise, a major manufacturer increased their polymer grade and refinery grade Propylene prices by 33.5% and 10.7% respectively.
Asian Linear Alpha Olefins (LAO) market witnessed stable domestic demand from downstream sectors during Q1 2021. Although the supply remained tight across the region due to the global shortage, following the US Gulf storm crisis in February. Local supply for LAO in Southeast Asia also reduced due to the Chinese Lunar holidays. Chinese lunar holidays affected the supply in other Asian countries as well, like Inedia and South Korea. In India, CFR prices of C24-C28 increased by 8.15% from January to March ending. On the other hand, GS Caltex announced a project to build mixed feed cracker having 700,000 TPA Ethylene and 350,000 TPA Propylene capacity which is likely to enhance the production capacity of South Korea and ultimately reduce the supply crisis of Asian market in the long term.
Linear Alpha Olefins (LAO) prices remained in uptrend across January, during Q1 2021. After January price acceleration was halted by the improved supply, as some cracker units restarted in the region. Shortage of supply amid high import demand from the Asian countries supported the prices of Linear Alpha Olefins (LAO). Borealis Stenungsund and INEOS Dormagen restarted their crackers in March, that improved the supply crisis across the region and effectively halted the price acceleration.
For the Quarter Ending December 2020
In the Asia Pacific region, overall demand for LAO marginally increased, as some countries like China received some good demand while its consumption in several Northeast Asian countries remained dull. Dow, one of the world’s leading olefins supplier revealed that they received appreciable offtakes of LAO from downstream Polyethylene sector specifically by Sadara, Kuwait and Thai joint venture due to the consistent upliftment in its polyethylene profit margins. Consequently, the average product prices were also increased by 8% in Q4 2020 compared to the previous quarter. In the Indian market, CFR prices of LAO C20-C24 increased from USD 366.83 USD to 464.16 per MT from October to December.
For North America region, Dow revealed that, in USA & Canada, the demand for packaging and speciality chemicals marginally declined due to the regional impact of hurricane outage in November, but the overall demand for LAO in the final quarter was deemed good. Some olefins like C4-C8 which are used in packaging and plastics sector faced extraordinary demand that let to increase in its prices by 8% from the previous quarter. Exxon Mobil, another leading supplier of LAO also revealed that, they observed appreciable sales from downstream LAO segments, moving from Q3 to Q4 2020.
During the final quarter of 2020, imports from USA faced severe disruption due to the adverse seasonal hurricanes specially in November, which created supply shortage and contributed to hike the prices of downstream Polyethylene and Polypropylene in the packaging industry. Exxon Mobil also showed that in the final quarter 2020, production of petroleum products as well as olefins downstream products remained low compared to same quarter of 2019, due to the second wave of COVID-19 in several parts.