China producers cut MEG output on poor margins

07 November 2008 09:47  [Source: ICIS news]

SHANGHAI (ICIS news)--China monoethylene glycol (MEG) producers have cut operating rates or shut down plants on the persistent downturn of the MEG market, said a market source on Friday.

BASF-YPC, a joint-venture of Sinopec and BASF, located in Nanjing, east China, shut down its 300,000 tonne/year MEG plant in late October for an indefinite maintenance period.

"The shutdown, forced by narrow margins, would not impact contract cargoes as we have plenty of inventory," said a source close to the company today.

Shanghai Petrochemical shut down its No 2 380,000 tonne/year plant as soon as its No 1 225,000 tonne/year unit restarted in mid-October.

The producer said it had to take turns in closing the two plants to avoid further losses.

"We planned to shut both of them simultaneously but we have to complete the scheduled production."

Maoming Petrochemical, in southwestern Guangdong province, plans to keep the operating rates at its 105,000 tonne/year MEG plant at 80% this month.

Yanshan Petrochemical, in the north, decided to cut rates at its 70,000 tonne/year plant to an undisclosed scale, according to company sources.

PetroChina subsidiary Jilin Petrochemical, located in the northeast, will also cut production output by 4,000 tonnes at its 160,000 tonne/year unit this month.

Most producers have ensured contract supply in spite of the large-scale reduction in output since they all have sufficient inventories.

Meanwhile, the downstream polyester industry has cut operating rates to 60% on average since late October due to weak demand, said polyester producers.

Clytze Yan from CBI contributed to this article
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By: Dolly Wu
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