Sinopec cuts China polyolefins production

29 November 2007 08:44  [Source: ICIS news]

SHANGHAI (ICIS news)--Sinopec has begun to reduce its polyolefins output since end-November to cater to the Chinese government's push to increase oil production, company sources said on Thursday.


"Diesel is tight in China. Reduced production of one tonne of ethylene would mean adding five tonnes of diesel," said a refinery source.


Propylene and ethylene, feedstocks of polyolefins, can be produced from naphtha by ethylene cracker. Naphtha is made in refinery together with other products such as gasoline and diesel.


The ratio of products in a refinery could be adjusted depending on demand, the source said.


China has asked Sinopec and PetroChina to beef up their gasoline and diesel output to help relieve the country’s oil shortage since October.


But the reduction in polyolefin output was only a temporary measure, otherwise polyolefin supply will be in shortage, a market player said.


Beijing Yanshan Petrochemical, a subsidiary of Sinopec, has cut injection grade polypropylene (PP) output at its 115,000 tonne/year unit by 30-40% from full rate, a company source said.


Output of Yanshan’s 710,000 tonne/year ethylene cracker was estimated to be cut 20-30%, or about 15,000 tonnes loss of olefins per month, the source added. The loss volume of polymer output was not yet to known.


Yanshan produces 440,000 tonne/year of polypropylene (PP) and 520,000 tonne/year of polyethylene (PE).


Reduction of Yanshan’s 115,000 tonne/year PP unit has not influenced China’s polymer market yet.


However, the north China polymer spot market could be a little tight in December if the scale-down duration the government has asked for would last more than one month, a market player said.


Sinopec’s other subsidiaries which include Shanghai Petrochemical, Yangzi Petrochemical, Qilu Petrochemical and Maoming Petrochemical are in talks with

the authority to cut production in December, sources close to the companies said.


“Maoming’s polymer output loss is estimated to be 11,000 tonnes in December,” a company source said.


“If these five big polymer producers cut output in December, China’s spot market supply would be very tight,” traders said.


PP capacities of the five polymer producers totalled 1.74m tonnes/year or 30% of the country's total. As for PE, the total capacities of the five was 2.69m tonne/year or 38% of the country’s capacity, a Shanghai-based analyst said.

By: Longston Li
+65 6780 4359

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