Weakening demand for plastics from various industries across Asia is directly decreasing the size of the naphtha market in the region. On Tuesday, naphtha prices in the region opened in a range of USD 948-953 per ton and Japanese CFR prices for naphtha declined by approximately 1.35%.
Witnessing a decline in the demand for plastics, ethylene prices also fell by approximately 6 to 7% from one month ago. The declining demand for ethylene is expected to prevent the Japanese end-user from buying naphtha at premium prices. With the supply of butadiene exceeding its demand, butadiene prices are also expected to drop considerably in the region. Sluggish growth rate of the automotives market is the major factor for the declining demand for butadiene in the Asian market.
Decreasing demand for plastics in China, the fastest growing economy in the world and one of the biggest petrochemical hubs in the Asia Pacific region, is pushing the naphtha prices in the region downward. China’s industrial output dropped from more than 10% in December 2012 to approximately 9.89% during January-February 2013.
South Korea based Lotte Chemical Corp had bought 50 kilo tons of naphtha supply for delivery to Yeosu at USD 29 per tons. The company recently bought another 30 kilo tons of naphtha for delivery to Yeosu priced at USD 26 per tons.