Kasikorn Securities (KS) noted that the petrochemical sector is beginning to see a resumption of operations in naphtha crackers in Taiwan. According to a report from OPIS, CPC Corporation has restarted its No. 4 naphtha cracker, which has a capacity of 380,000 tons of ethylene per year.
This restart follows the temporary lifting of sanctions by the United States, allowing the CPC to use imported feedstock from Russia.
The brokerage improved its view on the petrochemical business to slightly negative, as the resumption of operations could be the starting point for a return from oversupply.
However, the No. 4 cracker is the smallest of CPC’s production units, while the larger No. 3 cracker, with a capacity of 720,000 tons, remains offline. In addition, major Taiwanese producer Formosa is also still not operating, which indicates that naphtha supply remains significantly constrained.
Kasikorn recommends close monitoring of the resumption of operations at naphtha crackers throughout the region. Such developments will likely serve as a trigger for profit-taking actions in petrochemical stocks. Companies expected to be most negatively impacted include PTTGC and IRPC.
