KP Chemical shuts No 2 PTA on margins woes

17 December 2007 01:55  [Source: ICIS news]

SINGAPORE (ICIS news)--KP Chemical shut its No 2 350,000 tonne/year purified terephthalic acid (PTA) line in Korea over the weekend, and the unit is expected to remain closed until early next January, a company source said Monday.

“We shut the plant between Saturday evening and Sunday morning, but how long the shutdown will last depends on several factors. For now, it is until the first days of January,” the source said.

The source declined to say the exact reasons behind the shutdown.

But market players generally believed that poor economics for PTA producers led to KP’s decision to idle the unit.

The company last took the facility offline in October. It had also shut down other PTA lines which it operates over the past few months amid difficult market conditions for PTA makers.

Like all PTA producers, KP had faced the spectre of high feedstock costs and sluggish PTA sales as an overcapacity in the market squeezed margins.

Feedstock paraxylene (PX) costs had hovered at $1,110-1,150/tonne on a CFR (cost & freight) basis for the most of the past month.

PTA makers were already barely breaking even in November with a price of around $850/tonne CFR China, but prices had continued to drop to the current level of $820-830/tonne CFR.

With a total capacity of 1.25m tonnes/year, KP is one of the largest producers of PTA in Korea. It is also integrated with downstream plants, with a strong presence in bottle-grade polyethylene terephthalate (PET) chips.

By: Salmon Aidan Lee
+65 6780 4359

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