Supreme cuts op rates at Ratnagiri PS unit to 50%

29 November 2007 07:03  [Source: ICIS news]

SINGAPORE (ICIS news)--India’s largest polystyrene (PS) producer Supreme Petrochem has reduced the operating rate at its Ratnagiri plant to 50% from 70% due to weak demand and low margins, a source close to the company said on Thursday.

The company, however, may step up production in December if demand rebounds, he said.

The company cut production at the 272,000 tonne/year plant in the western state of Maharashtra to 50% following the seasonal post-Diwali lull earlier this month. “Buyers are slowly trickling back into the market, so there is a chance the company may raise operating rates in December,” the source said.

However, a trader said that the demand outlook was still not clear.

“This year, the peak demand season for PS, which normally runs through September and October, did not take off at all, as there was no rush to buy consumer durables like television sets or refrigerators ahead of Diwali,” he said.

“So I would not be surprised if Supreme decides not to increase production until early next year,” he added.

Another Indian PS producer, LG Polymers, is continuing to run its 80,000 tonne/year plant at Vishakapatnam, Andhra Pradesh state, at 60-70% capacity, and has no plans to raise capacity in the near future.

A source close to LG said. “Margins for PS are quite tight due to high styrene feedstock costs, so raising production doesn’t make for good economics,” he said.

However, Indian producers are looking to raise domestic prices of PS in December, after keeping them unchanged for the past three months due to customer resistance at Indian rupees (Rs) 69.50/kg ($) EXW (ex-works) for general purpose PS (GPPS) and Rs72.50/kg EXW for high impact PS (HIPS).

($1 = Rs39.56)

By: Prema Viswanathan
+65 6780 4359

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