FocusHeavy snow disrupts chemicals transport in northern China

12 November 2009 07:00  [Source: ICIS news]

By Judith Wang and Dolly Wu

SHANGHAI (ICIS news)--Strong snowfall in parts of northern China has paralysed chemical transportation in the region, prompting some industries to cut production due to delays in delivery of raw materials, industry sources said on Thursday.

“Winter has arrived earlier this year, which means polvinyl chloride (PVC) downstream pipe manufacturers are cutting operating rates or stopping production earlier,” said a chlor-alkali producer.

The onset of the winter season in the region saw Shijiazhuang, the capital of Hebei province, covered in 48cm of snow – the heaviest shower seen in 54 years, according to media reports.

Other affected provinces include Shanxi, Henan, Shandong and Shaanxi where heavy snow caused traffic jams. Planes were grounded and power supply was cut off in some areas, based on media accounts.

Delivery of chemicals such as PVC, caustic soda, methanol and urea has been affected, industry sources said.

“Road transport is basically halted due to closing of expressways. Transport of carbide and polyvinyl chloride has been paralysed,” said a PVC producer in Shanxi province.

“We have reduced the operating rates by 10-20% on the lack of feedstock carbide,” he said.

But weather-related production cuts may not boost PVC prices by much since “demand is weak at this time of the year and there’s overcapacity in China,” said a trader in south China.

“It might be hard for prices to increase sharply,” he said.

Domestic prices for carbide-based PVC in north China were assessed at yuan (CNY) 6,350-6,400/tonne ($930-937/tonne) ex-warehouse last week, while ethylene-based PVC was at CNY6,500-6,600/tonne ex-warehouse, according to global chemical market intelligence service, ICIS pricing.

Closure of expressways because of the heavy snow in Hebei and Shanxi provinces left thousands of vehicles stranded on the roads – more than 10,000 between Shanxi and Beijing, based on media accounts.

“Most of them are trucks with coal for heating purposes being transported from Shanxi province to Beijing,” said an official from a local traffic office.

The snowfall in Hebei and Shanxi has achieved peak level from previous years, according to a local weather bureau.

“The snow has been very heavy over the past four days. There is congestion at some parts in northern China because of the poor weather,” said another chlor-alkali producer in the region.

For methanol, delays in cargo deliveries could push up prices even as trading activities have stagnated, according to local producers in Shandong.

Domestic methanol prices were assessed at $247-252/tonne (€165-169/tonne) CFR China in the week ending 6 November, based on ICIS pricing data.

“The snow has little impact on the plants as they were already at low rates, but methanol prices in the neighbouring regions will likely rise if the cargoes could not be delivered timely,” said a local producer in Shandong said.

China's National Meterological Centre issued a warning on Thursday about possible snowstorms in central Shandong, and central and southern Liaoning provinces.

Local producers said they expect transportation to resume in the next few days.

Adverse weather conditions around the same time last year had also caused disruption on chemical transport in the eastern and southern parts of China.

($1 = CNY6.83 / $1 = €0.67)

With additional reporting by Ng Hun Wei, Penny Wang, Heng Hui, Echo Ma, Mindy Liu ,Emily Zhang and Rachel Qian

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By: Judith Wang
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