Asia ethylene 2018 term offers start at $80/mt premium, up $30-$35/mt on year

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Asian ethylene suppliers are pegging their initial offers for 2018 term contract negotiations at a premium of $80/ based on CFR Northeast -linked formula, market sources said Wednesday.

Market sources said that the buyers were surprised about the outcome as the offer level was around $30-$35/mt higher than a major settlement value of a premium of $50-$55/mt for 2017. No counter bids were heard so far.

Market sources said that the higher premium for 2018 is due to limited supply in the region, especially from , resulting from heavy steam cracker maintenance scheduled for next year.

According to data compiled by S&P Global Platts, six out of 12 naphtha-fed stream crackers in Japan will undergo maintenance. Approximately 3.46 million mt/year of ethylene capacity will be idle during the turnaround season, which is around 53% of the country’s total ethylene production capacity.

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The spot supply from is also expected to fall next year due to a start of a new ethylene derivatives plant. According to Platts report, ’s PTT is ramping up its commercial operations at its new 400,000 mt/year metallocene C6 linear low density polyethylene plant at Map Ta Phut.

Additionally, deepsea supplies from Saudi Arabia will also likely go down as a new ethylene downstream plant will start soon in the region. In 2017, Saudi Arabia’s ethylene exports increased due to a delay in the start of a new local polyethylene plant.

According to the customs data, ’s ethylene imports from Saudi Arabia stood at 95,602 mt for January-October, almost seven times up compared to 13,505 mt recorded a year earlier.

“Ethylene availabilities for 2018 would definitely be reduced compared to 2017. This is why suppliers are asking higher premium for 2018,” a market source said.

Market sources expect the term negotiations to likely continue to early 2018.

  • Platts.com

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