Impact of LOTTE Chemical Explosion Accident on Butadiene Market

SCI99

2020-03-04

Impact of LOTTE Chemical Explosion Accident on Butadiene Marke

According to foreign media, at about 2:59 a.m. on March 4, there was a huge explosion at the Daesan plant of LOTTE Chemical. After the explosion, the fire authorities dispatched all available manpower and equipment from the nearby fire department to deal with the fire. The accident injured 11 residents and workers, with no casualties. After the accident, the local government immediately sent a safety message to remind the residents to pay attention to the fact that there was no refuge order because it was not the leakage or occurrence of harmful chemicals.

According to SCI, the incident mainly involves the naphtha cracking units in the Daesan plant area. These units include 1,100/mt ethylene unit, 550kt/a propylene unit, 150kt/a butadiene unit, etc. The capacity of this butadiene unit accounts for 11.4% of the total capacity in South Korea. At present, these units involved in the explosion accident have been shut down. This butadiene unit doesn’t have matched downstream units. Yet, according to SCI, the butadiene resources are mainly provided to the rubber plants of LG Chemical, Kumho Petrochemical Group, etc. This shutdown of the butadiene unit will have a certain impact on the supply in South Korea.

At present, in South Korea, the import volume of butadiene is higher than the export volume. Meanwhile, South Korea is also the largest import origin of butadiene in China. According to the import data in 2019, China imported around 60kt of butadiene resources from South Korea. LOTTE Chemical is not the main exporter in South Korea. However, the 150kt/a butadiene has been shut down, so the butadiene resources in South Korea will give priority to provide the resources to its downstream producers. Thus, the overall export volume will be affected, and there is a possibility that South Korea will import butadiene resources.

At present, the butadiene prices in Asia and China are at low levels. Affected by this explosion accident, the butadiene supply at LOTTE Chemical will decrease, which does not exclude the possibility that some sellers may raise their prices. The specific situation still depends on the shutdown time of its butadiene unit.

.......

Please click "Read more" for more information