Fire breaks out at Lotte Ube Styrene Plant in Malaysia

According to foreign media reports, around 2:59 a.m. on March 4, 2020, a massive explosion occurred at the Lotte Chemical Daisan plant. Following the explosion, fire authorities deployed all available personnel and equipment from nearby fire stations to combat the fire. The accident resulted in 11 residents and workers being injured, with no fatalities. After the accident, the local government in Nishi-ichi immediately sent safety messages to warn residents. Since there was no leakage or release of harmful chemicals, no evacuation orders were issued. ” 　　According to Zhuochuang Information, this incident involves the naphtha cracking unit at the Dasha plant. The production capacity of this unit is 1.1 million tons of ethylene, 550,000 tons of propylene, and 150,000 tons of butadiene; the capacity of this butadiene production facility accounts for 11.4% of South Korea’s total capacity in this area. At present, the units involved in this section have been shut down, and this styrene plant does not have any downstream facilities. However, it is understood that most of its supply is used for rubber components in factories such as LG and Kumho; therefore, this shutdown will have a certain impact on its domestic supply chain. Currently, South Korea’s total imports of butadiene exceed its exports, and it is also China’s largest source of butadiene imports. According to 2019 data, its share in these imports has declined compared to previous years, falling to around 21%; the total amount of butadiene imported from South Korea that year was approximately 60,000 tons. Although Lotte Chemical is not the main manufacturer exporting goods from South Korea, with its 150,000-tonne benzene rubber plant now shut down, South Korean-supplied goods will inevitably be given priority to meet the production needs of domestic downstream manufacturers, which will have an impact on its overall export volume; there is also a possibility of an increase in imports. Currently, the prices of butadiene in Asia and China are at their lowest levels in recent years. Due to the reduced supply from South Korea as a result of this incident, there is some positive impact on the supply side; however, it is possible that some sellers of imported goods may raise their prices. However, given the current situation in the domestic market, port inventories remain at relatively high levels, downstream demand has not fully recovered yet, and it may not be the best time for market prices to continue rising. Perhaps influenced by this incident, the market experienced a rebound, but its duration and intensity may be limited; the exact situation will depend on how long the plant remains shut down. ZuoChuang Information will continue to monitor and report on this development. (This is for reference only)

Several recent accidents during maintenance periods

According to the New Straits Times, on the evening of March 15, 2020, local time, an explosion occurred in a petrochemical industrial complex in Johor, Malaysia. By early morning on the 16th, the explosion had resulted in 4 deaths, 1 person seriously injured, and 1 person missing. A firefighter in charge of the rescue operations at the scene said that the injured had been taken to a nearby hospital for treatment, and rescuers were still searching for the other missing person. The official said that there were 7 people at the scene of the explosion; 4 of them died, 1 person suffered 70% burns, 1 person went missing, and another managed to escape unharmed. The *official did not mention the cause of the explosion.

Malaysian Petrochemicals may see delays in the commissioning of olefins, MEG, and polymers due to the fire. Market sources told S&P Global Platts that a fire broke out early last Friday at the refinery in the Pengerang Integration Complex owned by Petronas in Johor, as well as at PrefChem; it is estimated that the commissioning of olefins, polymers, and MEG at these facilities will be delayed. In a statement released early last Friday, Petronas said that at 1:25 a.m. local time, a fire broke out in the complex, followed by an explosion. The fire was brought under control within 30 minutes, and the situation was stabilized. As the investigation is still ongoing, Petronas has not provided detailed information on which installations at the plant were affected by the fire. Platts reported that the company’s initial goal was to consume ethylene by April 15, so it has been keeping its cracking units operational since mid-March. However, market sources say that consumption of ethylene and other downstream products is now expected to be postponed. The steam cracking unit at PrefChem has an annual production capacity of 1.2 million metric tons of ethylene, 600,000 metric tons of propylene, and 180,000 metric tons of butadiene. A butadiene trader said that Petronas’ executives had previously informed him that Prefchem intended to export butadiene on May 2. He said, “I thought this deadline would be postponed.” ” A source said that in terms of its downstream operations, the company’s LLDPE and PP production lines have been operating continuously since last week, with the first batch of goods set to be shipped. “We are not sure yet whether this incident will have any impact; we are waiting to see consumer reactions. ”He added. PRefChem’s polymer facilities include an HDPE plant with a capacity of 400,000 tons per year, a PP plant with a capacity of 900,000 tons per year, and an LLDPE plant with a capacity of 350,000 tons per year. According to sources, the company’s other plants are operating smoothly, and it is planned to shut down its 250,000 tons per year LDPE plant in Malaysia in August for repairs that will last around 45 days. There is currently no plan to install its 200,000 tons per year HDPE/LLDPE facility at the same location to carry out similar maintenance work. The LDPE plant belongs to Petlin (Malaysia), which holds a 60% stake held by Petronas, while the HDPE/LLDPE plant belongs to Polyethylene Malaysia, with Petronas holding a 40% stake in it. Regarding monoglycerol, the 740,000 tons per year MEG production facility at its downstream stage managed to use imported ethylene, and MEG meeting the specified standards was produced by the end of March. S&PGlobalPlatts previously reported that the company is currently offline, waiting for the shutdown of cracking units in order to ensure a stable supply of ethylene. Two industry insiders from Southeast Asian markets estimate that the start of ethylene cracking installations will be delayed, and accordingly, the start of MEG installations will also be postponed.