KP Chem shuts No 2 PTA on PX costs, poor sales

26 June 2007 13:36  [Source: ICIS news]

SINGAPORE (ICIS news)--Purified terephthalic acid (PTA) producer KP Chemical has shut its No 2 350,000 tonne/year facility in South Korea for an unspecified duration due to poor economics, a company source said on Tuesday.

 

“We shut the line late yesterday evening, but we’re unsure how long the downtime will be as it depends on when the market would improve,” said the source.

 

The source also confirmed that the company’s No 1 swing PTA and isophthalic acid (IPA) line, with a nameplate capacity of 250,000 tonne/year, has been producing only IPA since early June.

 

The company’s No 3, 500,000 tonne/year unit was heard running at full rates. The source could not say if production cuts were in the pipeline for this third line.

 

Like most PTA producers, KP had seen its margins squeezed badly by escalating feedstock paraxylene (PX) costs and poor sales in June.

 

PX spot prices were at as high as $1,300/tonne CFR (cost and freight) Taiwan earlier this month, although they had retreated to around $1,130/tonne CFR by this week.

 

PTA, due to poor offtake among contract buyers in June, dropped as low as $900/tonne CFR China this month and looked set to fall into the $800s/tonne CFR later this week.

 

A trader close to KP said the company would rather keep its losses low-key, but “the situation was just so bad for every PTA maker, it’s now common knowledge”.

 

Other Korean producers which have recently scaled back operations included Samsung Petrochemical, SK Chemical and Samnam Petrochemical.

 

By: Salmon Aidan Lee
+65 6780 4359

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