China DME producers run low op rates on LPG lull

16 July 2008 11:44  [Source: ICIS news]

SINGAPORE (ICIS news)--Chinese dimethyl ether (DME) producers were running their plants at operating rates around 40-45% due to a drop in demand from the liquefied petroleum gas (LPG) market, industry sources said on Wednesday.

Nearly 93% of DME in China is used in LPG blending.

Hebei, northern China-based Kaiyue Chemicals reduced its operating rate to around 30% at its newly-built 500,000 tonne/year DME unit, a company source said, adding the reason was mainly attributed to squeezed margins resulted from high feedstock methanol prices and a lull in LPG demand.

“We could get margins above CNY1,000/tonne [$147/tonne] before, while the margins were less than CNY200/tonne now,” the source said.

A number of other smaller producers were also reported to have lowered operating rates. Kaiyue Chemicals is the second largest DME producer in China.

China’s DME capacity has been growing rapidly but the market has suffered from less economical efficiency in fuel blending and the bearish LPG market.

($1 = CNY6.82)

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By: Rainy Ma
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