Ethylene Profit Gains May End on China Supplies

Profits from making ethylene, used in everything from car parts to Buzz Lightyear toys, may be capped in Asia next year after Chinese production jumped to the highest level in eight months.

The net return from producing ethylene by putting naphtha through a cracker is $150 a metric ton, according to Jinsu Yim, a Singapore-based director at Chemical Markets Associates Inc., a U.S. research firm. It was $250 a ton in July, after a fire at Formosa Petrochemical Corp.’s No. 1 cracker in Taiwan reduced supplies. The profit may drop to $100 by January as new plants in Asia ramp up utilization rates, Yim said.