FocusChina chem firms struggle to restart ops

19 May 2008 06:33  [Source: ICIS news]

(Updates with latest death toll figure in final paragraph)

By Bohan Loh

SINGAPORE  (ICIS news)--Chinese chemical firms located in quake-hit Sichuan were struggling to resume operations, with some having lost many of their staff and others finding restarts hampered by fresh aftershocks, producers and traders said on Monday.

“Many people in our company are dead and buried in the collapse. We don’t know when our production will resume. Our current priority is to save people who are alive,” a company source from Yun Feng, a synthetic ammonia producer located in Shifang, Sichuan, said in Mandarin.

He added that the company’s resulting losses due to the earthquake had yet to be totalled up.

Shifang is located 70km away from the epicentre of the 8.0 magnitude earthquake that hit Sichuan on 12 May.

Another synthetic ammonia maker in Shifang - Ying Feng - suffered similar damage with its plants collapsing when the earthquake struck, trapping workers beneath the rubble.

The two synthetic ammonia producers leaked over 80 tonnes of molecules in all, sparking concerns about the environment and potential contamination of drinking supplies.

“We’re still trying to put a number to the damage that has been done” a company source from Sichuan Hongda, a phosphate producer, said. He added that the company’s facilities had been severely damaged.

Sichuan is home to a number of fertilizer makers and oilfields and is a primarily an agricultural region. The majority of China petrochemical facilities are along the coast.

The operations of majors PetroChina and Sinopec have been less affected by the quake but warned that there could be intermittent interruptions to oil and gas production in the region.

“Overall, when all the dust is settled, I would estimate a total damage not to exceed yuan (CNY) 3bn ($420m) for PetroChina and CNY2bn for Sinopec, roughly 2% and 5% of their (respective) overall 2008 profit estimates,” Gordon Kwan, Head of China Energy, CLSA, said.

PetroChina has also said it could scrap plans for the construction of a CNY20bn, 800,000 tonne/year ethylene plant in Chengdu, if studies concluded the site is prone to natural disaster as it is 60km from the epicentre of the recent earthquake.

The financial cost of the quake was estimated at a staggering $20bn by consulting firm Air Worldwide using insurance coverage and property data as a guide.

Some other chemical producers in Sichuan, however, emerged largely unscathed.

Ammonia and urea producer, Sichuan Meifeng reported to the Shenzhen Stock Exchange (SZSE) late on Friday that its production facilities and property were generally not damaged.

The company, however, suspended production on the same day to avoid any potential post-quake damage due to recurring after-shocks.

Lutianhua, the largest dimethyl ether (DME) producer in southwest China, shut down for two hours after the quake on Monday before resuming operations at 50% capacity, market sources said.

The Sichuan earthquake was the most devastating natural disaster to hit China since 1976, when the city of Tangshan in northeastern Hebei province was reduced to rubble.

Experts have predicted the eventual toll from the disaster to exceed 50,000 lives. The death toll now stands at more than 34,000 as China begins three days of mourning.

($1 = CNY6.99)

Dolly Wu and Judith Wang contributed to this article

Have you personally or your business been impacted by the earthquake in China? If you have any information or thoughts you would like to share, post your comments or photos on the ICIS China Earthquake forum. You can also send photos and video directly to us at icisnews.asia@icis.com or icisnews.europe@icis.com

By: Bohan Loh
+65 6780 4359

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