The ethylene market in Asia, which has been buoyed since the middle of February by tight supplies ahead of steam cracker turnaround season, remained close to a nine-month high versus naphtha Friday, Platts data showed.
CFR Northeast Asia ethylene was assessed unchanged at $1,205/mt Friday -- its highest since July 13 -- while CFR Japan naphtha fell $0.50/mt to $380.875/mt, putting the spread between two products at $824.125/mt.
That was up from $823.625/mt Thursday but below the $827.125/mt seen Wednesday which was the highest level since June 30 at $842.50/mt
End-users have actively sought spot ethylene cargoes to cover ethylene supply shortfall during the turnaround season, sources said.
Spot ethylene demand has remained strong in Northeast Asia in March from styrene monomer producers and Japanese end-users, supporting prices.
Some Japanese end-users have been seeking spot ethylene cargoes due to an ethylene production shortfall following the permanent closure of Asahi Kasei's 470,000 mt/year steam cracker in Mizushima from the middle of February.
Japan Petrochemical Industry Association data showed Japanese ethylene production in February dropped 5% year on year to 537,300 mt.
Styrene monomer producers in China have also been seeking spot ethylene cargoes amid positive margins even after the recent spike in Asian ethylene.
Asian styrene monomer producers are generating around $100/mt profit at current spot prices, according to Platts data.
Market sources said the Asian ethylene market was near its ceiling as spot demand slowed from other derivatives.
High ethylene costs have pushed down margins of most ethylene derivatives other than styrene monomer -- the price spread between polyethylene and ethylene has fallen to minus $70/mt, compared with a typical break-even spread of $150/mt.
"Spot ethylene demand from styrene producers remains strong but other derivatives producers are not catching up," said a market source.
Some Korean producers have also started considering reducing operating rates of ethylene derivatives plants to increase exports amid the rising spot ethylene market, which would likely cap the upside of ethylene in Asia.
