China chem transport hits snag on snowy roads

29 January 2008 05:37  [Source: ICIS news]

By Florence Tan

SINGAPORE (ICIS news)--Road transport of chemicals in central and east China ground to a halt this week as the region, ill equipped to handle snow, experienced its worst weather in over a decade, producers and traders said on Tuesday.

Affected provinces include Jiangsu, Hunan, Hubei, Anhui, Jiangxi and Henan.

A lack of proper equipment to clear thick snow led to highways being closed, and congestions in the railway system hampered coal delivery to the energy-intensive Jiangsu region, they added.

Without enough coal, local power stations could not run at full capacity, they said. Coal stocks at Nanjing city was also running out fast, down to a week’s supply, a Yangzi Petrochemical official said.

Higher demand for home heating has also led the local authority to restrain industrial power consumption, the sources said.

Chemical and downstream producers in the region shut their plants on power shortages and the inability to move their goods such as methanol and acetic acid out, they added.

In eastern China, several expandable polystyrene (EPS) plants were shut. These included an 80,000 tonne/year plant in Changzhou operated by Wuxi Xingda and a 250,000 tonne/year plant in Jiangyin under Loyal Chemical.

“There is very heavy snow in eastern China around Shanghai and the Zhangjiagang ports which has disrupted the logistics and production of the factories in that area. Demand for styrene will be affected,” a Shanghai trader said.

Fertiliser producer Liuguo Chemical shut its 200,000 tonne/year nitrogen, phosphorous and potash (NPK) plant in Anhui province as it was unable to move its products out, a company source said. A maleic anhydride (MA) maker in Jiangsu withdrew its offers as it could not move its products.

“Our factory roof-top was covered with two-metre-thick snow. As a precautionary measure, our workers dropped their usual work to clear the snow, in case it causes the roof-top to collapse,” a polyurethane foam maker in Kunshan, Jiangsu province, said.

He said that the local government also issued a directive to factories, telling them to stop operations two days a week, starting from last week. The authority did not say when normal power supply could be restored.

Many of his customers in the downstream furniture sector had also stopped their operations as they were unable to move their end-products to the ports to be exported, the foam maker said.

At Dongguan in southern China’s Guangdong province, where many plastic converters are based, a processor said its factory had to stop production for two to four days a week since mid-January due to power supply curbs.

“I think power stations in this region have not been able to run at full capacity due to difficulties in delivering coal to south China,” the plastics packaging maker said in Cantonese.

However, Sinopec’s plants in the region were operated normally as they have their own power supply, company officials said.

“Road transportation is affected, but it won’t be for long,” a Sinopec official said in Mandarin.

Seasonal weak demand before the Chinese New Year in February, also softened the impact on the petrochemical market, the sources said.

Traders said the impact on the ethylene vinyl acetate (EVA) market, which toned down this week ahead of the holidays, was minimal.

In the methanol market, bad weather and a shortage of coal feedstock have instead prevented prices from falling further, a producer and a seller said.

If the situation continued, methanol prices could even rebound slightly after the holidays, the seller said.

However, Yang Guiming, a weather forecaster at the National Meterological Centre, said the transport system would be back to normal on 5 February as the snow would last only for another five days.

($1 = CNY7.20)

Helen Lee, Helen Yan, Dolly Wu, Judith Wang, Serene Cheong, Anu Agarwal and Chow Bee Lin contributed to this article.

By: Florence Tan
+65 6780 4359

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