Siam-Mitsui cuts PTA ops further to 70-80%

17 December 2008 10:57  [Source: ICIS news]

By Bohan Loh

SINGAPORE (ICIS news) -- Thailand’s Siam-Mitsui has further reduced operating rates at its three purified terephthalic acid (PTA) lines in Map Ta Phut to 70-80%, on perceived weakness in overall market conditions and a possible dearth of feedstock, said company and other sources on Wednesday.

The company had previously alternated shutdowns among the three units to maintain an overall operating rate of around 85% due to squeezed margins, but the cutback had been widened since this month.

The 450,000 tonne/year No.1 line is currently down, while the 450,000 tonne/year No.2 and 500,000 tonne/year No.3 units are running at approximately 90% of nameplate capacity, said sources close to the company.

“The regional markets are now better, but [overall] still bad for sellers, so we decided to further reduce the production,” said one of the sources close to the company.

Margins for PTA producers have crept back since November, as spot prices recovered strongly to the current $610-620/tonne CFR China. Most PTA sellers made losses between July and October, after prices crashed to $520-530/tonne CFR China in end-October from a high of $1,705/tonne.

Because of the improved margins, market watchers believed that Siam Mitsui might have been also been forced to cut back on production due to tight supply of paraxylene (PX), rather than margins.

PTT Thailand slashed operations at its PX units this month, while the country’s only other PX maker, Thai PX, had also experienced snug supply. A PTT source also said that he was unable to satisfy “a sudden surge in demand among my customers for this month”.

“PX supply has been very tight recently, and PTA producers cannot up their operating rates even if they want to,” said a PX trader with Macau-based Winsway Trading.

The sources from Siam-Mitsui however denied the production cutback was due to PX issues.

Siam Mitsui is the largest PTA producer in southeast Asia. It is a joint venture between Japan’s Mitsui Chemicals and Thai conglomerate Siam Cement.

Salmon Aidan Lee contributed to this article

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By: Bohan Loh
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