FocusAsia PA, DOP producers prepare for tough fourth quarter

19 September 2011 07:45  [Source: ICIS news]

By Quintella Koh

SINGAPORE (ICIS)--Asian phthalic anhydride (PA) and dioctyl phthalate (DOP) producers are preparing for a rough ride as they move into the fourth quarter of this year, industry sources said on Monday.

“With such high feedstock orthoxylene (OX) costs, PA producers are losing money with every tonne of material produced,” a South Korean producer said.

OX spot prices were assessed at $1,575/tonne (€1,150/tonne) CFR (cost & freight) northeast (NE) Asia on 16 September, while PA values were at $1,460/tonne CFR China Main Port (CMP) on the same day, according to ICIS.

Typically, a tonne of PA is made by using 950kg of OX. A producer then needs to add $100/tonne to its price to cover conversion costs. Based on the assessed OX and PA prices on 16 September, Asian producers are losing $136.25 for each tonne of PA they make.

“This situation is dire, which is why regional producers are slashing PA production rates,” a Chinese producer said.

In India, IG Petrochemicals Limited (IGPL) is keeping the production at its PA plants at 70% of their capacities. IGPL operates two PA lines in Taloja with a combined production capacity of 116,110 tonnes/year.

In China, Shandong Hongxin is operating its three PA lines, with a total production capacity of 120,000 tonnes/year, at 70% of their capacities.

South Korea’s Aekyung Petrochemical has lowered the operating rates at its 150,000 tonne/year DOP plant at Ningbo in Zhejiang province to 50% of its capacity as it is unable to obtain sufficient feedstock PA.

“OX and PA prices are high at present. It really does not make sense for us to keep our DOP production rates high,” the official said.

The price of DOP was assessed at $1,815/tonne CFR east Asia on 16 September. OX prices are likely to remain high in the coming weeks because of tight supply, industry observers said.

The high prices of feedstock isomer-grade xylene (IX) and comparatively lucrative co-product paraxylene (PX) are keeping most OX makers focused on maximising their PX yields, the observers added.

($1 = €0.73)

For more on DOP, IX, PA, OX, PX, visit ICIS chemical intelligence
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By: Quintella Koh
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