SINGAPORE--Yeochun Naphtha Cracking Center (YNCC) aims to restart its 550,000 tonne/year No 2 cracker at Yeocheon, South Korea, tonight after the facility was shut down unexpectedly on Thursday morning due to compressor issues, a company source said.
"We ll try to start up the cracker tonight. Fortunately, it is not a big problem. It s a failure of supplying some oil for the compressor," the source from the country s largest cracker operator told ICIS news.
He said the company planned to run the No 2 unit at 95% after the restart similar to the current operating rate at its other two crackers at the same site. This would be maintained until early October unless margins improved.
YNCC had trimmed production at the No 1 and No 3 crackers to around 95% from full rates this week due to poor economics. The No 1 cracker has a nameplate ethylene production capacity of 850,000 tonnes/year while the No 3 cracker can produce 400,000 tonnes/year of ethylene.
"We have reduced the operating rates from yesterday evening as economic margins are not good," said the same source, adding that poor derivative margins and the recent sharp downward correction in ethylene prices had contributed to the decision to cut production.
Traders said they were not surprised by YNCC s move to trim the operating rates at its three crackers in the current weak market climate. Some polypropylene (PP) producers such as Daelim Industrial and Polymirae, who receive propylene feedstock from YNCC, were also mulling cutting their plant output.
"YNCC s cost of ethylene production is about $1,400/tonne so there s no way they can even cover that now," said an ethylene trader. "This reduction is also helping them save money."
He added that the outage and the production cuts had minimal impact on the ethylene spot market, as sentiment remained bearish.
Ethylene spot prices slumped to a four-month low of $1,380-1,420/tonne CFR (cost and freight) northeast (NE) Asia last week, according to global chemical market intelligence service ICIS pricing.
This was due to shrinking spot demand from end-users in downstream sectors ranging from monoethylene glycol (MEG) to polyethylene (PE) as buyers had cut back on their raw material purchases due to poor business conditions, traders said.
"We ll try to start up the cracker tonight. Fortunately, it is not a big problem. It s a failure of supplying some oil for the compressor," the source from the country s largest cracker operator told ICIS news.
He said the company planned to run the No 2 unit at 95% after the restart similar to the current operating rate at its other two crackers at the same site. This would be maintained until early October unless margins improved.
YNCC had trimmed production at the No 1 and No 3 crackers to around 95% from full rates this week due to poor economics. The No 1 cracker has a nameplate ethylene production capacity of 850,000 tonnes/year while the No 3 cracker can produce 400,000 tonnes/year of ethylene.
"We have reduced the operating rates from yesterday evening as economic margins are not good," said the same source, adding that poor derivative margins and the recent sharp downward correction in ethylene prices had contributed to the decision to cut production.
Traders said they were not surprised by YNCC s move to trim the operating rates at its three crackers in the current weak market climate. Some polypropylene (PP) producers such as Daelim Industrial and Polymirae, who receive propylene feedstock from YNCC, were also mulling cutting their plant output.
"YNCC s cost of ethylene production is about $1,400/tonne so there s no way they can even cover that now," said an ethylene trader. "This reduction is also helping them save money."
He added that the outage and the production cuts had minimal impact on the ethylene spot market, as sentiment remained bearish.
Ethylene spot prices slumped to a four-month low of $1,380-1,420/tonne CFR (cost and freight) northeast (NE) Asia last week, according to global chemical market intelligence service ICIS pricing.
This was due to shrinking spot demand from end-users in downstream sectors ranging from monoethylene glycol (MEG) to polyethylene (PE) as buyers had cut back on their raw material purchases due to poor business conditions, traders said.
