Yield of olefins and aromatics in Asia are expected to change in Q1 2018 as several naphtha-fed steam cracker operators have already switched to or plan to use more LPG as feedstock.
Since December 2017, several petrochemical companies in Northeast Asia have opted to buy butane and propane after naphtha feedstock costs rose on stronger crude oil prices.
In late November last year, Japan's Showa Denko and Mitsui Chemicals, each bought at least one parcel of butane totaling 50,000 mt for delivery in H2 December/H1 January. Usually, they buy butane cargoes of 11,000 mt each.
Most steam crackers in Asia use naphtha as the main feedstock but tend to use a percentage of LPG when its price is around 90% of naphtha, or when LPG is around $50/mt cheaper than naphtha. Usually, the percentage ranges over 5-20%.
Less steam is required to crack lighter feedstocks such as LPG compared with naphtha. LPG is classified as a lighter feedstock while naphtha is a heavy feedstock.
Typically, propane and butane yield more ethylene and propylene at 45% and 37%, respectively, compared with about 30% for naphtha, data from the US Association of Energy and Economics showed.
For benzene, propane and butane yields are zero for both versus 5% from naphtha.
For butadiene, the yield stands at 2% for both propane and butane against 5% for naphtha.
On Tuesday, naphtha stood at $587.75/mt CFR Japan while propane and butane were $546/mt and $529/mt, respectively, on a CFR Japan basis, S&P Global Platts data showed.
Japan's JXTG Nippon Oil and Energy Corp. has switched a portion of its steam cracker feedstock to LPG, sources familiar with the matter said Monday.
The company is seeking 10,000 mt of LPG each for its two naphtha-fed steam crackers in Kawasaki, sources familiar with the matter said Monday. The cargoes are for delivery in H2 March but details of the propane/butane split could not be confirmed.
Widespread use of LPG is likely to be limited, however, as the turnaround season kicks off in Northeast Asia in the latter part of Q1.
For instance, Yeochun Naphtha Cracking Center plans to shut its No. 2 naphtha-fed steam cracker at Yeosu over February 25-March 6 for repairs.
The nature of the repairs to the No. 2 cracker, which has a design production capacity of 580,000 mt/year of ethylene and 270,000 mt/year of propylene, was not disclosed.
Nevertheless, YNCC has plans to use LPG as feedstock for its steam crackers in H2 February.
Since December, South Korea's Hanwha Total has been using LPG as feedstock for its sole steam cracker at Daesan that produces 1 million mt/year of ethylene, 600,000 mt/year of propylene and 114,000 mt/year of butadiene.
Lotte Chemical also plans to use LPG as feedstock for its Daesan steam cracker from February. The cracker can produce 1 million mt/year of ethylene, 500,000 mt/year of propylene and 130,000 mt/year of butadiene.
In early January, Taiwan's Formosa Petrochemical bought 22,000 mt of propane for H1 February delivery via tender. It followed this up with the purchase of a 44,000 mt propane cargo for H2 February delivery and more recently a 44,000 mt evenly split LPG cargo for delivery in H1 March.
These cargoes were bought at ever deepening discount to the Mean of Platts Japan naphtha assessments, with the latest purchase transacted at a discount of around $80/mt to MOPJ naphtha assessments.
The spread between LPG and naphtha had flipped into a discount early this month from the premium seen since May last year, which had kept petrochemical makers away from LPG for more than half of 2017. Before that LPG had occasionally made up 5-15% of their cracker feedstock.
On Monday, the discount for propane to MOPJ naphtha assessments was assessed at $73.75/mt, making it a viable alternate feedstock. Butane, which was $18/mt lower than propane on Monday, is even more attractive as a feedstock.
From February, Formosa will use LPG for all its three crackers in Mailiao. Overall, the three crackers have a combined production capacity of 2.93 million mt/year of ethylene, 1.465 million mt/year of propylene and 451,000 mt/year of butadiene.
Meanwhile, six of 12 naphtha-fed stream crackers in Japan will shut for scheduled maintenance, starting with JXTG, Showa Denko and Tosoh over March-April.
