China ethyl acetate makers cut May output on margin squeeze

31 May 2010 11:08  [Source: ICIS news]

SINGAPORE (ICIS news)--China-based ethyl acetate (etac) producers have cut plant operating rates further to around 50% in May from 60-70% in April, due to squeezed margins caused by high costs of feedstock ethanol and falling etac prices, industry sources said on Monday.

Most producers were losing money given the recent decline in etac prices in line with recent plunges in crude and most other petrochemical products, said an eastern China-based maker.

“Even though acetic acid raw material prices have fallen, ethanol feedstock prices are still high,” the producer said in Mandarin.  

Chinese domestic acetic acid prices shed yuan (CNY)100-150/tonne ($15-22/tonne) over the past two weeks to CNY2,750-3,000/tonne ex-tank due to weak fundamentals, market sources said.

Ethanol values, meanwhile, remained steady at high levels of CNY6,400-6,500/tonne DEL (delivered), versus CNY5,750-6,300/tonne DEL in mid March, they added.

Etac prices in the local and exports markets continued on a downward spiral since mid March due to abundant supply of China-origin material, stiff competition, with demand largely stable, market sources said.

Chinese domestic etac in eastern China were traded lower at CNY6,000-6,050/tonne ex-tank at the close of business last Friday, down from CNY6,300-6,400/tonne ex-tank in early May.

Across Asia, etac prices were also on steady decline since mid March, with numbers in northeast Asia losing 3.83% to $870-890/tonne CFR (cost and freight) NE Asia, and down 5.47% in southeast Asia to trade at $900-915/tonne CFR SE Asia at the close of business last Friday, according to ICIS pricing.

“Most producers still have inventory and sales are not good,” a Jiangsu-based producer said.

Export business had also paled as buyers held back June purchases on expectations that etac offers from China would decline further, market sources said.

“Hopefully, the production cuts will serve to stabilise prices,” said the Jiangsu-based producer in Mandarin.

($1 = CNY6.83)

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By: Helen Lee
+65 6780 4359

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