Petrochemicals demand to improve in 2010; cracker margins expected to remain weak

摘要

CRISIL Research forecasts cracker margins to decline in 2010 due to ethylene oversupply expected in the international market from the Middle East. The region has an advantage in terms of feedstock, as it produces ethylene through the gas route, which is cheaper than that produced through the naphtha route. In addition, gas prices in Middle East are lower than the rest of the world. This, along with around 1-mtpa capacity addition in India, is expected to put pressure on the margins of the Indian petrochemical players. On an average, cracker margins were around $133 per ton of ethylene produced in 2009, as compared to $145 per ton in 2008. In the first half of 2009, the fall in feedstock prices along with weak petrochemicals demand led to a sharp fall in basic petrochemicals as well as polymer prices. Thus, cracker margins declined to $28 per ton of ethylene produced during this period, as compared to $94 per ton of ethylene produced in the same period on 2008. In the second half of 2009, however, with the improvement in demand, cracker margins improved.