08 May 2008 10:19 [Source: ICIS news]
SINGAPORE (ICIS news)--South Korea’s Hanwha Chemicals is running its 550,000 tonne/year caustic soda plant in Yeosu at less than 50% after ethylene supplier Yeochun Naphtha Cracking Center (YNCC) shut down its crackers following a power outage, a company source said on Thursday.
The company plans to increase its operating rate to 70% by 12 May but the date at which it could run the plant at 100% will depend on how quickly YNCC can fully restart its crackers, the source added.
“We restarted our caustic soda production on 5 May but because of the ethylene shortage, our operating rate now is not even 50%,” the source said.
Because of the operating rate cut, Hanwha Chemicals is unlikely to export any spot caustic soda cargoes in June, the company source said.
“Usually we export around 6,000 dry tonnes/month (of caustic soda) but we could lose around 5,000 dry tonnes by the time the production fully resumes,” the source said. "Therefore, we are unlikely to have much supplies left for export."
The production loss is likely to further tighten caustic soda supplies in n?xml:namespace>
Restarted late on Tuesday, YNCC’s 850,000 tonne/year No 1 naphtha cracker was producing on-spec material and running at 47% production rate early Wednesday.
Its 550,000 tonne/year No 2 cracker was expected to be up Thursday night. However, the company's 400,000 tonne/year No 3 naphtha cracker could take more than 15 days to restart, a company source said.
Ethylene is not used in the production of caustic soda but it is used in combination with chlorine, a by-product of the caustic soda production process, to form other derivatives such as polyvinyl chloride (PVC).
Because chlorine, which is gaseous at room temperature, cannot be readily stored in large volumes, the production rate of caustic soda is limited by how quickly chlor-alkali producers can utilise the chlorine gas.
Asian caustic soda was last week assessed at $380-400/tonne FOB (free on board) northeast Asia according to global chemical market intelligence service ICIS pricing, with market players generally bullish due to tight supplies and strong demand.
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