China’s DME producers hit by anti-dumping probe on methanol

30 June 2009 09:33  [Source: ICIS news]

GUANGZHOU (ICIS news)--China’s dimethyl ether (DME) industry has been feeling the squeeze as prices of feedstock costs spiked due to an ongoing anti-dumping probe on methanol imports, industry sources said on Tuesday.

They said several DME producers have delayed restarting their plants or maintained low operating rates following the announcement on 24 June that China has started investigating methanol imports from Saudi Arabia, Malaysia, Indonesia and New Zealand.

Methanol, the only feedstock for DME production in China, jumped by yuan (CNY)65/tonne ($9.5/tonne) or 3.4% to CNY1,950-1,980/tonne ex-terminal on Monday from last Wednesday's levels in the eastern and southern parts of the country where DME trading is most active, according to global chemical market intelligence service ICIS pricing

Such increase in feedstock costs trimmed DME producers’ margins to a slim CNY90/tonne on average, with those based in Shandong province incurring losses, based on calculations by China energy market intelligence service C1 Energy.

DME producers complained that the increase in methanol prices have gone beyond what they could afford and began interrupting operation schedules at plants.

“We originally decided to start up production facilities amid recovering demand, but now have to wait,” said one producer.

Hebei Kaiyue Chemical Industrial Co, which has a total DME capacity of 650,000 tonne/year, decided to run a 100,000 tonne/year unit only in view of pricier methanol.

For the same reason, Hebei Yutai Group opted to postpone restarting its 100,000 tonne/year DME facility, while Fujian Fugang Chemical balked at a plan of starting up its 100,000 tonne/year DME unit late this month.

If methanol prices continue to rise, DME producers’ profits may get eroded entirely, industry sources said.

($1 = CNY6.83)

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By: Fanny Zhang
+65 6780 4359

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