Sinopec cuts polymer output again to spur demand

08 September 2008 10:55  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s Sinopec has continued to reduce polymer production in September due to high inventory levels and weak downstream demand, a company sales manager said on Monday.

The company planned to cut low density polyethylene (LDPE) production by 18,260 tonnes in September, high density PE (HDPE) by 17,400 tonnes and linear low density PE (LLDPE) by 14,600 tonnes, the source said.

Polypropylene production would be cut by 19,300 tonnes, the source added.

Seven Sinopec subsidiaries were involved in reducing rates, including Yanshan Petrochemical, Qilu Petrochemical, Tianjin United, Yangzi Petrochemical, Shanghai Petrochemical, Guangzhou Petrochemical and Maoming Petrochemical, he added.

Sinopec took the same measure in August in a bid to drive the bearish market, with traders saying China’s polymer prices rallied in mid-August but then resumed their downward trend.

According to China chemical market intelligence service ICIS Chemease on 5 September, China LDPE film dropped CNY100-450/tonne ($15-66/tonne) from the previous week to CNY13,000-15,100/tonne EXWH (ex-warehouse), LLDPE film decreased CNY50-550/tonne to CNY12,650-14,950/tonne EXWH and HDPE film declined CNY200-300/tonne to CNY13,300-14,300 EXWH.

PP yarn also fell sharply by CNY500-600/tonne to CNY12,500-12,900 EXWH in east China over the same period.

Asia’s largest refiner said it would also cut capital expenditure this year in a bid to reduce capital and investment risks, according to its website.

“High international oil prices and the more competitive petrochemical industry in the foreseeable future will give much pressure on the company’s profit, cashflow and market supply,” Wang Tianpu, president of the group's Hong Kong-listed vehicle Sinopec Corp, said at an investment meeting attended by listed and non-listed members of the Sinopec group.

The company would delay some project constructions and suspend “non-urgent" projects while adjusting the pace of others, he said.

Sinopec reported a 77% year-on-year drop in net profit in the first half of the year due to soaring crude values, the government’s tight rein on prices of domestic oil products and the spikes in chemicals prices.

($1 = CNY6.84)

Bohan Loh contributed to this article
Click here to find out more on the European polyethylene margin report
For more on PP and PE visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Judith Wang
+65 6780 4359

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 30 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly