Malaysian cracker operator Lotte Titan plans to reduce operating rates at its polyethylene (PE) and polypropylene (PP) plants to 85-90pc from early next week to April on the back of high feedstock costs.
The decision comes amid concerns of margins becoming uneconomical in the short term among regional producers after feedstock naphtha prices have surged to multi-year highs since early March. Other producers in Indonesia and Thailand are also expected to reduce operating rates at their naphtha crackers and polyolefins plants during March-April.
Lotte Titan operates a 230,000 t/yr low-density polyethylene (LDPE), a 335,000 t/yr high-density polyethylene (HDPE) and a 640,000 t/yr polypropylene (PP) plant in Pasir Gudang, Malaysia.
The producer is expected to reduce operating rates at its No.1 naphtha-based cracker by around 10pc through the same period. The cracker can produce up to 285,000 t/yr of ethylene and 145,000 t/yr of propylene.
Lotte Titan had shut its fluidised naphtha cracker earlier since mid-February for a planned maintenance that could last for at least two months. The cracker produces 93,000 t/yr of ethylene and 127,000 t/yr of propylene. Its 640,000 t/yr PP plant has been operating at lower rates of 85-90pc for the same period because of feedstock shortages.
In Indonesia, Lotte Chemical Titan Nusantara operates a 250,000 t/yr HDPE plant and a 200,000 t/yr linear-low density polyethylene plant. Operating rates at its Indonesian plants could see reductions on similar margin concerns but it would also depend on the availability of feedstock ethylene.
Argus assessed duty-free PP raffia and LDPE film prices at $1,470-1,510/t and $1,710-1,730/t cfr southeast Asia respectively on 4 March 2022, up by $5-50/t from previous session.
