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In 2022, naphtha will still be the main raw material for cracking
.
However, under the influence of geopolitical issues in Europe, the international oil price fluctuated sharply, resulting in a shortage of naphtha in some regions, and companies in some parts of Asia even shut down
Before the geopolitical situation in Europe deteriorated, the market has been worried about the supply of cracking raw materials
.
After the situation deteriorated, the supply of cracking raw materials really came, which caught many petrochemical companies in Asia by surprise
Up to 15 percent of Asia's naphtha imports come from Russia, the Black Sea and the Baltic region, according to industry consultancy FGE
.
At present, many petrochemical plants have suspended purchases from Russia, and the replacement products themselves are expensive and will take about 6 weeks to arrive
"The situation is very uncertain for crackers in Asia right now," said Armaan Ashraf, senior analyst at FGE
.
He said buying naphtha amid high crude prices is "high risk" and at least a month's worth of profits rate will remain at a low level
Traders pointed out that South Korea's Lotte Chemical has now reduced the operating rate of its Malaysian plant to below 90%, and plans to further reduce the operating rate when market conditions deteriorate
.
Hanwha Total Petrochemical, South Korea's Lotte Chemical and LG Chem have reduced operating rates by 10% to 20%
Although the supply of naphtha is a problem, other cracking feedstocks are not very good at making up for the shortfall in naphtha
.
Traders and analysts said that while LPG is also a good cracking feedstock, rising prices have dampened the options of Asian cracking producers
Propane production at U.
S.
natural gas plants is expected to increase by an average of about 120,000 bpd from the previous year, reaching 1.
82 million bpd in 2022, according to data from S&P Global Platts
.
This output is difficult to meet even the demand for new propane dehydrogenation units in China
However, the trader also said: "For various reasons, U.
S.
LPG inventories have been low for over a year
.
This has led to high U.
