Any potential impact on production at Hanwha Total's Daesan petrochemical complex in South Korea remains uncertain following a tanker collision in the East China Sea January 6, the company sources in the olefins and aromatics departments told S&P Global Platts.
Even though Hanwha Total has made moves to source an unspecified volume of open-spec naphtha via tender for H2 February delivery, with an option to deliver in H1 February into Daesan, to tide them over, impact on the production in the short-term "is nil, and further out, uncertain," according to a company source.
"Any moves to reduce aromatics production would have to come from the plant side, and currently there's no word from them yet. At the current margins from naphtha, cutting operating rates would be the last thing on their minds," he said.
The spread between the PX CFR Taiwan/China marker and the CFR Japan naphtha marker was assessed at $349.50/mt January 8, the highest value since September 5, 2017, when it was assessed at $360.13/mt.
Hanwha Total's nameplate aromatics production capacity at Daesan stands at 1.96 million mt/year of PX and 995,000 mt/year of benzene.
The company's offtakers, which includes traders and end-users in the PX market, also confirmed that they have received no word from the company about any curtailing of February supply or any rearrangement to the offtaking schedule.
"For the moment, we're seeing no impact yet, but it will become clearer in the days ahead, once the plant side has completed the assessment of its feedstock reserves," a trader, who lifts PX from the company, said.
On the olefins side, a company source from Hanwha Total said late Monday that the steam cracker operations remained normal after the collision news. The company has a naphtha-fed steam cracker in Daesan with a total ethylene production capacity of 1 million mt/year.
Market sources said that the company would like to keep high steam cracker operating rates in light of fat ethylene margins.
The price spread between ethylene and naphtha climbed $1.87/mt from last Friday to be calculated at $802.50/mt Monday, the highest level since October 2, 2017, when it was at $807.38/mt, S&P Global Platts data showed.
The price spread is much higher than a typical breakeven spread of plus $350/mt.
The 164,154 dwt Sanchi tanker, carrying 136,000 mt of South Pars condensate, caught fire late Saturday after a collision with the Hong Kong-registered cargo vessel CF Crystal, approximately 97 km (60 miles) off the South Korean coast late Saturday, as reported by Iran's oil ministry news agency Shana.
The cargo was purchased by Hanwha Total Petrochemical and it was scheduled for delivery to Daesan on January 8-10.
