Sinopec to cut cracker rates to 80% from October

26 September 2008 09:25  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s largest petrochemicals producer Sinopec intends to extend cracker rate cuts to as low as 80% from October to cope with rising olefin inventories and weakening downstream sales, said market sources close to the company on Friday.

State-run Sinopec, which operates 11 naphtha crackers with a combined ethylene capacity of close to 6.5m tonne/year, has been struggling with high stocks for downstream products such as polymers since May.

Modest cuts of 5-6% were announced earlier in September but failed to address the imbalance caused by a severe downshift in domestic demand. Sinopec was not available at the time of going to press.

Joint venture crackers such as Shanghai Secco and BASF-YPC were also reported to have been affected and were running at reduced rates of 85-90%, following the downturn in domestic chemicals demand, market sources said.

Regional cracker operators in South Korea, Japan and Taiwan have also scaled back production due to weak demand, prompting concerns that this downturn could be the impact from the global economic slowdown.

Polypropylene (PP) and polyethylene (PE) has slumped to a low of $1,300/tonne and $1,380/tonne CFR China respectively, posting their biggest weekly losses in 10 years, based on data from global chemical market intelligence service ICIS pricing.

Weaker demand for other petrochemicals such as aromatics, acrylonitrile, styrene monomer (SM), monoethylene glycol (MEG) and phenol have also contributed to lower operating rates at the crackers.

Maoming Petrochemicals, Beijing Yanhua, Qilu Petrochemical and Yangzi Petrochemicals are part of the Sinopec group.

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By: Steve Tan
+65 6780 4359

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