The fallout from the arctic blast that took out some of the biggest US refineries is being felt across the Pacific Ocean in Asia, where plastics makers are facing surging prices for key feedstocks.
The US is a major supplier of naphtha and propane — which are turned into petrochemicals used to make everything from medical masks to vehicle interiors — to Asia.
While refineries in the US are slowly restarting, it looks set to be a messy process that could take several weeks.
Naphtha in Japan is up by about 8 percent since Feb. 11 and was at the widest backwardation, a market structure indicating tight supply, in a year this week.
Prices for propane, a type of liquefied petroleum gas (LPG), for delivery late next month and early April to Asia are fetching premiums of US$28 to US$45 a tonne over the regional benchmark, traders said, from as low as US$3 for delivery at the end of this month.
The big freeze’s impact is rippling through energy supply chains in different ways.
Asian plastics makers are facing higher costs, but the region’s producers of fuels such as gasoline are benefiting from refinery shutdowns.
Asia needs about 2.5 million tonnes of naphtha from the US and Europe both next month and in April, said Armaan Ashraf, an analyst at FGE.
However, the US is forecast to send just 910,000 tonnes to the region this month, according to estimates from Vortexa, down from 1.2 million tonnes last month.
“The US is pulling more than usual volumes of oil products from Europe,” Ashraf said. “So there’s a chain reaction across the board.”
A similar trend is happening with propane.
US LPG exports to Asia are just under 1.1 million tonnes so far this month, Vortexa said, down from 2.6 million tonnes last month.
About 11 LPG tankers are in the Houston Ship Channel to pick up cargo, while 27 are waiting to get in, ship-tracking data showed.
The surge in feedstock prices is hitting Asian importers, including Formosa Petrochemical Corp (台塑) in Taiwan, LG Chem Ltd and Lotte Chemicals Corp in South Korea, and Reliance Industries Ltd in India.
Prices might ease once the LPG backlog starts getting cleared in April, but higher-than-usual demand due to the cold weather might keep benchmark prices firm, traders said.
That would in turn result in higher demand and prices for naphtha, Ashraf said.
There would also be much more incentive to blend the naphtha into the gasoline pool in the US as the motor fuel’s prices have soared, he said.
RETAIL BANKING EXIT: Clients are concerned whether their rights would be protected, while employees were caught by surprise as the bank had just upgraded its services Citibank Taiwan Ltd (花旗台灣) yesterday said that credit card clients could continue using their cards as operations would continue normally until it sells its consumer banking business. As of February, the bank had 2.86 million credit cards in circulation in Taiwan, of which 2.17 million had been used in the past six months, ranking it sixth among all banks, data from the Financial Supervisory Commission showed. Credit card spending by Citibank clients totaled NT$15.66 billion (US$552.6 million) in February, also ranking sixth among banks in Taiwan. Citibank was the only foreign bank that made it into the top six. Customers should not
FUTURE GROWTH: TSMC chief executive officer C.C. Wei said customer demand for 3 and 5-nanometer technologies is so strong that it needs to spend on more capacity Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised this year’s capital expenditure to a record US$30 billion, as demand for advanced chips used in high-performance-computing (HPC) applications is stronger than last quarter. The figure surpasses the chipmaker’s allocation in January of US$25 billion to US$28 billion. The investment is part of a three-year US$100 billion capital expansion plan that TSMC unveiled earlier this month. “As we enter a period of higher growth, underpinned by the multiple years of structural mega-trends of 5G-related and HPC applications, we believe a higher level of capital investment is necessary to capture the future growth opportunities,” TSMC
PANDEMIC EFFECT: Chromebook shipments in the first quarter more than tripled from a year earlier, driven primarily by educational institutions in North America Despite a semiconductor shortage, global PC shipments in the first quarter of this year increased 32 percent from a year earlier, preliminary data from research firm Gartner Inc showed. Shipments in the January-to-March period totaled 69.87 million units from 52.93 million units a year earlier, Gartner said in a report on Monday last week. The quarterly increase in shipments marked the fastest annual growth since it began tracking the PC market in 2000, Gartner said. “This growth should be viewed in the context of two unique factors: comparisons against a pandemic-constrained market and the current global semiconductor shortage,” Gartner research director Mikako Kitagawa
UNWINDING BIGGEST DEAL: Five years ago, Dell acquired VMware’s parent, EMC Corp, for US$67 billion, which helped the PC maker to branch out from its origins Dell Technologies Inc on Wednesday said that it would spin off its stake in VMware Inc, creating two publicly traded companies and raising cash to pay down debt. Its shares jumped on the announcement. The spinoff would unwind, at least in part, a consolidation created five years ago in Dell’s US$67 billion acquisition of VMware’s parent, EMC Corp. The spending spree helped Dell branch out from its origins as a PC maker, but left the company saddled with debt. VMware would distribute a special cash dividend of US$11.5 billion to US$12 billion to shareholders at the close of the deal, which is