Significant Increase In Petrochemical Production Capacity In Asia Forced The Company Cut The Second

Asia will increase this year, a record production of naphtha cracking process

, combined with a substantial increase in production of new enterprises, the Middle East, will force the second half of this year, lower petrochemical capacity utilization, which is at full capacity last year.

Asian companies to reduce capacity utilization is essential to maintaining profits of petrochemical products, but will hurt demand for naphtha. Analysts said the Asian cracking capacity utilization to fall to about 85%.

China, South Korea, Thailand, Singapore and India will add 6.3 million tons of ethylene capacity, total capacity will reach 4,203 million tons in Asia. China's new capacity accounting for more than one-third of the total added, is expected to reduce its import demand.

New Middle East petrochemical enterprises to use cheaper natural gas instead of naphtha as raw materials, greater competitiveness, and has started to increase production in Asia this year will certainly not spared the impact of oversupply.

Traders had expected oversupply last year, will lead the European and Asian petrochemical industries to close to stop production. But to postpone the Middle East new business production, the situation did not last year.

Asian petrochemical companies face this year, a large area equipment maintenance, has also led to reduced processing, will pressure naphtha market.

** China will reduce imports of ethylene and polyethylene **

If the biggest buyer of petrochemical raw materials in Asia - China reduced the import of ethylene and polyethylene, naphtha suppliers will be hit hard.

Petrochemical industry consulting firm De Witt & Co's Mazlan Razak is expected that China this year and next year will be 7-10% polyethylene demand is growing, but imports will decline, because of its new capacity of domestic production.

He said, "(this year) polyethylene imports fell in China, estimated to be 650-700 million tons." China's imports last year was 7.4 million tons.

Consulting Chemical Market Associates Inc (CMAI) is expected this year, imports of ethylene in China's 1.02 million tons from last year fell to 770,000 tons.

The company's JinsuYim said, "Singapore, Thailand and China will have a new cracker production. Profits will shrink later this year company operating rate will be reduced to about 85% of capacity."

Analysts said that while China added a new hydrocracking unit, and in 2009 became a net importer of naphtha, the import volume this year is still not enough to offset the drop in capacity utilization in the Asian naphtha demand.

Only South Korea, Japan and Taiwan is labeled ethylene production capacity reached 1,914 tons. Capacity utilization of 25% reduction in naphtha demand means reduced by nearly 1.2 million tons per month.

Most of the Asian petrochemical naphtha mainly higher-cost production of ethylene as raw material.

A South Korean petrochemical companies, said the current 1,140 per tonne ethylene offer offshore dollars, double the previous year.

But no buyer in such a high level of eating, their new capacity will be expected to suppress the price of ethylene.

JinsuYim said, "The current profit of about 200 U.S. dollars per ton of ethylene, since the beginning of the year to 700.3 on profits has been declining, will soon be close to zero."

by: gaga

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