A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes

By Trixie Yap

SINGAPORE, Dec 4(Reuters) - ExxonMobil plans to wind down operations at the older of its two steam crackers on Singapore's Jurong Island from March, four sources familiar with the matter said, part of a global petrochemicals sector trend to reduce capacity amid industry losses.

The shutdown of the plant, which opened in 2002, is expected to be complete by June, two of the sources said. The sources asked not to be identified because they were not authorised to speak to media.

The imminent shutdown of the U.S. major's first cracker in the Asian oil trading hub comes as chemical producers grapple with losses from overcapacity led by China, the world's largest consumer of petrochemicals used to make products ranging from plastics and clothes to shoes and cars.

"As a matter of practice, we do not comment on market rumors or speculation," an ExxonMobil spokesperson said in response to Reuters' queries.

The planned shutdown comes after Exxon's start-up earlier this year of a new steam cracker in the southern Chinese city of Huizhou, which can produce around 1.6 million tpy of ethylene.

Exxon has in the past two years gradually scaled down term contract volumes with customers in Singapore, a second of the four sources said.

Local buyers will likely switch to offtake from the two remaining ethylene producers in Singapore, traders said.

Exxon has a second 1.1 million tpy cracker at Jurong Island which started operations in 2013.

South Korea, another major petrochemical hub in Asia, is also seeing sector consolidation.

POST-CLOSURE PLANS

Exxon is considering buying feedstock to continue operating some of its derivative polyolefin units after the cracker's shutdown, depending on margins, the first source said.

"Unless they can secure very low olefins prices, this is unlikely to be economically viable in the long term," said Catherine Tan, ICIS senior manager for chemical analytics.

Tan expects Exxon to reduce imports of naphtha, the cracker's main feedstock, as a result of the shutdown.

For the first 11 months this year, Exxon imported around 1.5 million metric tons (13.4 million barrels) of naphtha, compared with nearly 2.5 million tons for all of 2024, data from ship-tracking firm Kpler showed.

In October, Exxon said it expected to cut 10-15% of its Singapore workforce by 2027. The U.S. major also agreed to sell its petroleum retail business in the city-state to Indonesia's Chandra Asri, co-owner of Aster Chemicals which runs the Bukom refinery-petrochemical complex.

In September, however, Exxon started operations at a new refining unit at its 592,000 barrel-per-day (bpd) Singapore refinery.

(Reporting by Trixie Yap, additional reporting by Chen Aizhu; Editing by Florence Tan and Lincoln Feast.)