Traders eye Chinese butadiene after explosion in Korea
Traders are exploring possibilities of exporting Chinese butadiene (BD) to South Korea after an explosion at Lotte Chemical's Daesan cracker on 4 March crippled a 150,000 t/yr extraction unit and forced an indefinite force majeure declaration. The accident injured at least 31 people.
A BD consumer based in South Korea was forced to seek prompt second-half March supplies from Malaysia after Lotte declared force majeure. Freight rates between Malaysia and south Korea are currently hovering around $90/t while shipping costs between east China and South Korea are nearly half at around $50/t. Freight rates between Dalian, where Hengli's new 140,000 t/yr BD extraction unit is located, and South Korea would be even lower.
China's production of BD has risen over the past few months with the start-ups of both Hengli Petrochemical and Zhejiang Petrochemical's 200,000 t/yr plant on Zhoushan island. Prospects of Chinese BD exports are also now higher as the government started to provide a full 13pc refund on value added tax (VAT) from March 2019. There was previously a 3pc difference in VAT paid and refunds, which prevented substantial BD exports.
South Korea-based BD consumers have also started to receive offers for prompt BD from Chinese shore tank inventories in the high-$800s/t cfr Korea but had deemed these offers too high. Domestic Chinese BD prices are also under pressure as downstream operating rates remain low as a result of the coronavirus outbreak. Delivered prices are hovering around 6,400 yuan/t or around $794/t on an import parity basis after accounting for 2pc import tax and 13pc VAT.
But exports from these two green-field producers may not start immediately. Hengli Petrochemical has yet to stabilise the water content of its BD cargoes and this may not be able to meet specification requirements of Korean consumers, but this issue is expected to resolve itself over time. Zhejiang Petrochemical has already reached on-specification production from its plant but its export terminal will only be put into operations in May.
Related news posts
Philippines' JG Summit delays cracker restart
Philippines' JG Summit delays cracker restart
Singapore, 14 May (Argus) — The Philippines' sole cracker operator JG Summit has delayed the restart of its Batangas cracker by another week because of technical glitches. The cracker was shut on 9 May on technical issues and was scheduled to restart over the weekend of 10 May, but this has been delayed again to the weekend of 17 May because of other technical glitches, according to sources close to the company. JG Summit's cracker has a nameplate capacity of 480,000 t/yr of ethylene and 240,000 t/yr of propylene. Toong Shien Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Daio Paper to explore biorefinery
Japan’s Daio Paper to explore biorefinery
Tokyo, 13 May (Argus) — Japanese paper manufacturer Daio Paper is planning a trial biorefinery, aiming to begin commercial production of sustainable aviation fuel (SAF), second-generation bioethanol and biodegradable plastic feedstock by the April 2032-March 2033 fiscal year. Daio, in partnership with domestic biorefinery venture Green Earth Institute (GEI), plans to develop technology to demonstrate manufacturing the bioproducts by 2030. Daio Paper plans to use wooden biomass, waste paper and paper sludge as feedstock. The company declined to disclose any planned commercial output capacity, as well as location of the biorefinery. The project is financed by Japan's state-owned research institute Nedo. Daio Paper is attempting to achieve decarbonisation, while weakening paper demand has forced the industry to seek new business opportunities. Fellow Japanese paper producer Nippon Paper has also tried to develop biorefinery technology with GEI, targeting to begin commercial production of bioethanol for SAF and petrochemical feedstock by 2027-28. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China, US pledge joint methane action at climate talks
China, US pledge joint methane action at climate talks
San Francisco, 13 May (Argus) — The US and China have pledged to further co-operate on methane reduction, among other topics, following a first meeting between the countries' new climate envoys in Washington during 8-9 May. The meeting follows video conferencing between the two sides in January under their "working group on enhancing climate action in the 2020s" initiative. China and the US reaffirmed their 2021 agreement to co-operate on reducing carbon emissions in the power generation sector, cutting methane emissions and boosting renewable energy in the " Sunnylands Statement on Enhancing Cooperation to Address the Climate Crisis " last November in San Francisco. China confirmed the appointment of Liu Zhenmin to replace Xie Zhenhua as the country's climate advsior in January. Liu's US counterpart John Podesta replaced John Kerry in January. Liu and Podesta discussed co-operation "on multilateral issues related to promoting a successful COP 29 in Baku, Azerbaijan" at the latest talks, the US state department said on 10 May. They also discussed issues identified in the Sunnylands statement, including energy transition, methane and other non-CO2 greenhouse gases, the circular economy and resource efficiency, deforestation,as well as low-carbon and sustainable provinces, states and cities. They plan to co-host a second event on reducing methane and other non-CO2 greenhouse gases in Baku and "conduct capacity building on deploying abatement technologies". It remains to be seen how the two new climate advisors will bring the two countries closer in climate negotiations. The Sunnylands statement and the close relationship of their predecessors were instrumental in bringing consensus at last year's Cop 28 UN climate summit in Dubai. China released a much anticipated methane plan last November, although Xie has flagged challenges with data monitoring in the sector. But China and the US have agreed to develop and improve monitoring to "achieve significant methane emissions control and reductions in the 2020s". China has also not signed on to the Global Methane Pledge to cut methane emissions by 30pc by 2030, from 2020 levels. The country's emissions may also rise more than expected after it redefined its meaning of energy intensity, according to the Helsinki-based Centre for Research on Energy and Clean Air. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
JG Summit shuts Philippine cracker on technical issues
JG Summit shuts Philippine cracker on technical issues
Singapore, 10 May (Argus) — The Philippines' sole cracker operator JG Summit shut its Batangas naphtha cracker on 9 May because of technical issues. The cracker, which can produce up to 480,000 t/yr of ethylene and 240,000 t/yr of propylene, is expected to restart this coming weekend, sources close to the company told Argus . It also shut associated units — a 70,000 t/yr butadiene extraction unit and an aromatics plant with nameplate capacities of 90,000 t/yr of benzene, 50,000 t/yr of toluene and 30,000 t/yr of mixed xylenes — along with the cracker. These are also expected to return this weekend. JG Summit is keeping its downstream units running by drawing feedstock from its inventories. The producer has a 320,000 t/yr linear-low density polyethylene/high-density polyethylene (HDPE) swing plant, a 250,000 t/yr HDPE unit and a 300,000 t/yr polypropylene line at the same site. By Toong Shien Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more