18 July 2008 17:43 [Source: ICIS news]
HOUSTON (ICIS news)--Higher feedstock costs and demand destruction led INEOS to cut its production rate by an additional 10%, leaving its plants at 60% of capacity, while Cytec has also cut production, the companies said on Friday
The INEOS announcement came after the company’s decision last week to scale back operations by 30%.
INEOS will still meet its contract customers’ orders, but will avoid the spot market until customers’ can meet higher asking prices or the costs of raw materials retreat from record-high levels, a company representative said.
The 10 cents/lb increase for July propylene brought squeezed producers’ margins to the breaking point, while customers retreated from price hikes manufacturers introduced, the source said.
ACN spot prices were assessed at $1,975-2,020/tonne (€1,244-1,273) on 11 July, according to global chemical market intelligence service ICIS pricing. Production costs are said to be around $2,300/tonne.
The company has not sold material in the normally active ACN spot market for about six weeks. As such, it will further reduce production at its Green Lake plant in Texas and its Lima line in Ohio, which have nameplate capacities of 460,000 tonnes/year and 200,000 tonnes/year, respectively.
Buyers and traders have been saying for weeks that the higher prices are untenable, as the ?xml:namespace>
The problems facing INEOS are widespread throughout the ACN market.
Meanwhile, Cytec Industries said it reduced production last week at its 227,250 tonne/year Fortier plant in
Cytec CEO David Lilley said on Thursday that the company had increased ACN prices by 46% in the second quarter, a move that he said was leading to demand destruction in the market.
ACN manufacturers around the globe have felt the pinch, as companies in
($1 = €0.63)
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