JG Summit naphtha cracker, BTX, PE, PP units shut indefinitely since end-December

JG Summit Holdings Inc. (Manila, Philippines) has kept its naphtha cracker and related polymers and benzene, toluene and xylene (BTX) units at Batangas, Philippines, “on indefinite shutdown” amid poor economics, as per Chemweek.

It was earlier reported the company might consider restarting its operations in February or March. Several market participants said margins were poor. The polypropylene (PP)-propylene spread stood at $35 per metric ton on March 6, unchanged day over day and lower than the $150 per metric ton breakeven cost, according to Platts data.

The Batangas cracker has an annual nameplate capacity for 480,000 metric tons of ethylene, 240,000 metric tons of propylene and 70,000-80,000 metric tons of butadiene.

It also has downstream plants with annual capacities for 320,000 metric tons of high-density polyethylene or linear low-density polyethylene, 300,000 metric tons of PP, 90,000 metric tons of benzene, 50,000 metric tons of toluene, 30,000 metric tons of mixed xylenes and 20,000 metric tons of mixed aromatics, according to Commodity Insights data.

JG Summit’s ethylene plant at Batangas is the country’s only naphtha cracker. The company last November announced plans to “infuse additional capital” of up to 11.0 billion Philippine pesos ($198.5 million) into its petrochemicals subsidiary JG Summit Olefins Corp. (JGSOC). The injection was primarily intended to pay off JGSOC’s maturing obligations and support the business’s operations during a period of declining market demand and rising input costs.

Several other cracker operators in Asia-Pacific have been running their plants at reduced capacity amid the startup of new greenfield units and bearish market outlook.

Eneos Corp. (Tokyo) last month decided to suspend operations at one of the company’s two naphtha crackers at its Kawasaki, Japan, site by the end of the financial year ending March 31, 2028. The cracker to be idled is designed to produce 448,000 metric tons per year of ethylene and 260,000 metric tons per year of propylene.

Lotte Chemical Titan Holding Bhd. (Kuala Lumpur, Malaysia), a subsidiary of Lotte Chemical Corp. (Seoul, South Korea), idled the No. 1 steam cracker at its Pasir Gudang, Malaysia, site, with effect from Dec. 15. The cracker has an ethylene capacity of 430,000 metric tons per year.

Lotte Chemical shut down its No. 2 downstream complex at Yeosu, South Korea, last December, halting surplus ethylene production.

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Mitsui Chemicals, Inc. affiliate Mitsui Chemicals India Pvt. Ltd. has established the coating technical center (CTC) at Gurgaon, as per Chemweek.

The new center will improve the company’s technical support capabilities in the coatings and engineering materials business.

The facility is equipped with coating machines capable of handling coating methods — including gravure, reverse gravure and air knife — along with analyzers. “This will allow customers’ issues to be quickly resolved in India rather than having to send products to Japan for testing and evaluation, as had been the case previously,” it said.

The CTC will help support customers in developing products by undertaking research and development focused on the latest coating technologies, as well as by providing technical guidance to customers on getting the most out of Mitsui Chemicals’ products.

Against the backdrop of mounting concern about environmental problems and the tightening of government regulations, India is seeing growing demand for sustainable packaging. “Of particular note are moves to reduce the use of disposable plastic and switch to alternative materials,” it added. The CTC has been established to serve as a base for providing technical support, with plans to meet the needs of customers in the Indian market.

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India’s purified terephthalic acid (PTA) downstream polyester producers are considering lowering production rates in the coming weeks, pressured by eroding margins and swollen stockpiles, as per Chemweek.

Downstream producers are deeply concerned about falling margins, prompting them to consider lowering production run rates, market sources said.

Until recently, most Indian polyester plants were operating at around 85%-90%, though a cut in run rates is expected to occur soon, according to a producer.

“Lowering run rates of polyester plants is not an easy decision, as it affects the quality of the end product. It must be a well-thought-out decision,” the producer said.

Some producers have already reduced their run rates to around 70%-75%.

The main driver for this decision is weak demand for fabrics and polyethylene terephthalate bottles in the domestic market, further worsened by a poor export environment, sources said.

“There is a buildup in inventories of both PTA and polyester fabric in the country following large imports of the material over the past few months,” a PTA buyer said.

India exported around 35,000-37,000 metric tons of fabric in September and October last year, but this fell to 27,000 metric tons in December and further dropped to 22,000-24,000 metric tons in January this year, market sources said.

The country’s blazing hot summers are typically a boom season for polyethylene terephthalate (PET) products, but demand has not picked up much so far.

“Margins for PET bottles are anyway not that great,” a PET producer said, adding that a deluge of cheaper imported PET bottles each year further damages margins for domestic producers.

While the decision to curb polyester production has spooked downstream players, upstream PTA producers are becoming increasingly anxious.

Delays in finalizing PTA term contracts for 2025 are expected to persist as the price spread between international PTA sellers and Indian buyers has widened again, traders said.

“If I were to include all the spot and contractual conversations lately, they have been at [around] para-xylene (p-xylene) plus $93-$98 per metric ton, and more granularly at p-xylene plus $95-$97 per metric ton,” a major Indian PTA buyer said. “Now, we will wait for a bit.”

Due to the volatility in p-xylene prices over the past few years, Indian PTA buyers and international producers have adopted a p-xylene-linked pricing mechanism.

“I had bid for a spot cargo at p-xylene plus $91 per metric ton when it was being offered at p-xylene plus $95 per metric ton, but I withdrew my bid,” another India-based PTA buyer said. “I am not going to buy even at p-xylene plus $90 per metric ton right now.”

”The market is very bad currently; there is a massive buildup of PTA and polyester inventories, poor margins even in the domestic market and little likelihood of improvement in the near term,” a fourth PTA buyer said.

PTA imports into India, however, have been steadily rising despite the grim downstream scenario.

According to the latest government customs data, India imported around 161,771 metric tons of PTA in November. Market sources said imports were around 270,000 metric tons in December, 220,000 metric tons in January and above 200,000 metric tons in February.

“The main reason for such massive imports is shipments on breakbulk over the past few months, when container freights had surged,” a trade source said.

Flush with supplies, the upcoming turnarounds for Indian PTA and polyester producers are unlikely to tighten the market much, buyers and traders said.

With a couple of festivals approaching in India, a labor shortage is a possibility at polyester plants during this time of year, sources said, adding that this, in turn, dents consumer buying power.

Market participants are mainly waiting for a revival in consumer demand to support the entire sector, they said.

Outside of India, the PTA market offers little hope, as the Chinese downstream polyester sector struggles with poor demand in the region, sources in China said.

To address rising PTA inventory, several producers in China have opted for turnarounds over the next two to three months, despite the peak summer demand season approaching, a trader in Singapore said.

“Not sure what the Far East market is doing, [but] PTA plants have shut and have balanced off p-xylene now. It is a different market,” the trader said. “Margins for PTA were pretty bad, [and] also PET, [as] it was oversupplied,” a second trader in Singapore said.
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The outlook for Asian polyethylene terephthalate (PET) demand looks increasingly opaque, denting spot prices and margins and prompting producers to continue reducing operation rates in the coming months, trade sources said, as per Chemweek.

Due to sluggish demand and rising stockpiles, most Chinese producers have recently reduced operating rates to around 70%. “As we lower our operating rates, production costs rise,” a market source said.

Weak margins and run rates are making operations unsustainable, prompting many producers to conduct turnarounds, sources said. A wave of planned maintenance is expected between March and May, including one by China’s Zhejiang Wankai New Materials, which could temporarily ease supply pressure.

Concerns over oversupply in China continue to affect the PET market, with market participants wary that excess production could pressure prices and margins. Uncertainty remains over whether demand will strengthen as the peak season approaches.

“This year, the supply-demand pattern for bottle-grade PET is unfolding differently from previous years,” said a Chinese trader, elaborating that the post-Lunar New Year recovery has been weaker than expected, leading to seasonal inventory accumulation in China.

Trade sources attributed weak buying interest to crude price volatility and the lingering impact of Trump-era tariffs, while increased spot availability kept buyers cautious, further slowing purchases.

Export demand from the beverage industry in the coming months could be a key factor in balancing supply, market participants said.

China’s PET capacity expansion continues to play out, with additional supply expected through 2025. Approximately 2.4 million metric tons per year of new capacity came online in 2024, with production rising. While some market participants expect demand to pick up later in 2025 as buyers deplete inventories, others argue that persistent oversupply will continue to cap prices and margins.

“The demand outlook remains uncertain. While annual demand for bottle-grade PET is still expected to grow, rapid capacity expansion will undoubtedly pressure prices and production margins,” said a Chinese PET market source.

Platts, part of S&P Global Commodity Insights, assessed FOB Northeast Asia bottle-grade PET prices at $795 per metric ton on March 5, down $5 per metric ton week over week, marking an 11% or $95 per metric ton drop year over year.

Platts also assessed FOB Southeast Asia bottle-grade PET prices down 9.4%, or $90 per metric ton, over the same period to $870 per metric ton on March 5. Feedstock purified terephthalic acid (PTA) producers remain anxious, hoping for improved PET demand.

The downstream polyester sector in China appears increasingly lackluster as domestic consumption patterns show little to no improvement, a PTA producer in the region said. “Market is very bad [as the] worldwide economic situation has [had a] negative impact on [the] polyester value chain,” the producer said.

China’s PTA producers have had to consider shutting their plants for turnarounds over the next few months despite the peak summer demand season on the horizon, traders said.

Producers in China and the neighboring region remain hopeful for a demand recovery driven by seasonal factors.

“We are hoping that [the] nature of demand [has the] seasonal factor, such as [summer demand] for PET bottles,” the PTA producer said. Platts assessed PTA CFR China at $629 per metric ton on March 11, down $4 per metric ton from the previous day.

We remind, Indian purified terephthalic acid (PTA) producers are considering cutting production rates in the coming weeks due to falling margins and rising inventories. Polyester producers are concerned about falling margins, prompting them to consider cutting production rates.

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The head of industry association Plastics Europe (Brussels) has urged political leaders to seek diplomatic solutions to escalating trade tensions between the US and Europe, warning that the imposition of tariffs will disrupt supply chains, hike costs and impact consumers, as per Chemweek.

The US accounted in 2023 for 11.7% of EU polymer exports, valued at €3.4 billion, and 22.2% of EU polymer imports, valued at €5.3 billion, Virginia Janssens, managing director at Plastics Europe, said March 13.

The US “remains a major trade partner for the European plastics sector,” she said. The import and export figures “highlight the significant trade relationship between the EU and the US in plastics, underscoring the potential economic consequences of escalating tariffs,” she said.

“The imposition of tariffs, particularly on industrial goods such as plastics, will disrupt supply chains, raise costs for businesses, and negatively impact consumers on both sides of the Atlantic,” Janssens said.

The European Commission on March 12 announced retaliatory tariffs on €26 billion of US goods, including plastics and agricultural products, in a move it called “strong but proportionate” to the US instituting a 25% tariff on all steel and aluminum imports, regardless of origin, at midnight March 12. According to the EC, these products account for about $28 billion worth of goods exported to the US.

The EU’s countermeasures will be introduced in two steps, starting April 1, with full implementation on April 13. The EC also said it would restore previously suspended tariffs, beginning April 1.

Plastics Europe, which is linked to the European chemical industry association Cefic, acknowledged the EU’s decision to potentially impose retaliatory tariffs on US goods in response to the recent announced increase in US tariffs on steel and aluminium.

“While we understand the EU’s need to safeguard its economic interests, we emphasise the importance of maintaining the principles of free and fair trade that are so important to fostering global economic stability and growth,” Janssens said. “As a key stakeholder in the European plastics industry, we urge both the EU and US to prioritise diplomatic solutions to avoid escalating trade tensions further,” she said.

Plastics Europe supports the EU’s openness to negotiation, as outlined by European Commission President Ursula von der Leyen, and the call for collaborative efforts to resolve the dispute “in a manner that protects industry, jobs, and consumers in both the US and Europe,” Janssens said.

The association will monitor and further evaluate with its membership “the potential impact of these tariffs on the European plastics industry,” she added.In 2023, European production of plastics declined at a steeper rate than expected, according to data released by Plastics Europe in November last year. Compared with 2022, total EU plastics production saw a sharp decline of 8.3% in 2023, to 54 million metric tons (MMt). The figure contrasted with a 3.4% global increase in plastics production and meant that Europe’s share of the global plastics market had declined to 12%, it said.

While Europe had maintained a positive trade balance in value terms, in tonnage terms it became a net importer of plastic resins in 2022 and of plastic finished goods in 2021, with the region’s exports of plastics falling 25.4% between 2020 and 2023, it noted.

The European plastics value chain supports more than 1.5 million jobs across 51,700 companies and generated more than €365 billion in revenue within the EU during 2023, it said at that time.

European plastic manufacturers continue to face high production costs in comparison to other major producing regions due to factors including high energy and feedstock prices, and persistent inflation, amid a sustained downturn in terms of end-user demand.

The EC said on March 12 that the retaliatory duties are being imposed under the bloc’s Enforcement Regulation, which treats them as any other trade safeguard measures. “As the first step in this process, a two-week stakeholder consultation will run until 26 March. On the basis of the collected input, the Commission will finalize its proposal for the adoption of countermeasures, and consult Member State,” the commission stated. “Once this process is completed, the Commission aims to have the legal act imposing the countermeasures in place by mid-April.”

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