Hanwha TotalEnergies to keep Daesan cracker running despite PX force majeure

Hanwha TotalEnergies Petrochemical will keep its Daesan naphtha cracker operating to maintain petrochemical supplies despite declaring force majeure on paraxylene deliveries, according to a South Korean government notice reported by OPIS. The government said on 17 April that it did not expect the declaration to cause major disruption.

The company declared force majeure on 13 April after the Middle East conflict disrupted the supply and delivery of production raw materials, a company notice reviewed by OPIS showed. In an earlier letter to customers dated 1 April, HTC said it had reduced production since March and could make additional cuts or partially shut operations. That letter did not identify the products affected.

The Daesan cracker can process both naphtha and LPG. OPIS data puts its nominal annual capacity at 1.5 million metric tonnes of ethylene and 810,000 tonnes of propylene. A recent survey by the outlet found that Asian crackers with feedstock flexibility were increasing LPG use because its lower dependence on Middle Eastern supply made cargoes easier to source as inventories dwindled.

Across South Korea, however, naphtha cracker operating rates have dropped from 80% to 55% following feedstock disruptions since the Iran war started in late February, OPIS reported. Seoul is pressing domestic producers to lift utilisation to 70% over the coming months. The country depends on imports for more than half of its naphtha, with the Middle East supplying over 70% of those imported volumes.

South Korea has secured up to 2.1 million tonnes of naphtha, enough for approximately one month of cracking activity, with cargo arrivals expected from late April. The government has also authorised KRW674.4 billion ($492 million) in supplementary budget support to help facilitate imports as part of its response to the supply shortage.

Margins remain under pressure alongside the feedstock constraints. Chemical Market Analytics by OPIS data showed spot naphtha production cash losses widening to $619 a tonne in the week ended 2 April, compared with $254 a tonne on 12 March.