SE Asia braces for heavy 3Q petchem turnaround season

Market: Petrochemicals
31/05/21

Olefin production losses in southeast Asia will likely peak in the third quarter of this year, Argus data indicate, with planned cracker turnarounds at major producers potentially leading to tight supplies in the region.

Aside from intra-regional consumption, olefins produced in southeast Asia are often exported to northeast Asian destinations like China and Taiwan. Total southeast Asian exports of ethylene and propylene to China reached 77,580t and 80,000t respectively in 2020. These made up 4pc and 3.2pc respectively of China's total ethylene and propylene imports last year.

Argus expects ethylene and propylene production losses in southeast Asia to reach 551,000t and 411,000t respectively between July and September this year. The estimated production losses make up 4pc of southeast Asia's total nameplate ethylene and propylene capacity.

Malaysia will have the heaviest cracker maintenance. Two ethane-based crackers at Ethylene Malaysia, which is majority owned by Malaysian state-owned refiner Petronas, and the No.1 naphtha-based cracker at Lotte Titan, the Malaysian unit of South Korean petrochemical producer Lotte Chemical, are poised to shut during June-July (see table). Malaysia has a total of five crackers.

Meanwhile, Petronas' newest 1.29mn t/yr naphtha-based cracker at its 300,000 b/d Pengerang refinery joint venture with state-controlled Saudi Aramco will likely restart in the fourth quarter. The complex in southern Malaysia has been shut since March 2020 following a fire.

A potential supply shortage resulting from the turnarounds will likely keep cfr southeast Asia prices of ethylene and propylene supported. But gains may be capped by weaker market sentiment in northeast Asia because of emerging supplies from new crackers in China and South Korea.

Weaker margins and slower demand from China are also subduing downstream sentiment for polyethylene (PE) and polypropylene (PP) in southeast and northeast Asia. A recent resurgence of Covid-19 cases in southeast Asia has hit PP and PE demand in the region.

Argus last assessed ethylene and propylene prices on a cfr southeast Asia basis at $970-1,000/t and $1,040-1,100/t respectively on 26 May.

By Toong Shien Lee

Turnarounds in southeast Asia in 3Q 2021
Producer	Location	Affected unit	Ethylene ('000t)	Propylene ('000t)	Period/Duration

Ethylene Malaysia	Kerteh, Malaysia	Cracker	400	N/A	Mid-June to mid-July, 35 days
Petronas	Pengerang, Malaysia	Cracker + FCC	1,390	1,360	Expected restart in 4Q
Lotte Titan	Pasir Gudang, Malaysia	No.1 cracker	285	145	5 July, 35 days
PCS	Pulau Ayer Merbau, Singapore	No.2 cracker	625	350	Mid-July, 35 days
PTT Polyethylene (PTT PE)	Mab Ta Phut, Thailand	Cracker	1,000	25	Mid-September to early November
Total			3,700	1,880
Source: Argus data

Asian ethylene capacity losses in the third quarter of 2021 '000t

Asian propylene capacity losses in the third quarter of 2021 '000t

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