02 November 2011 06:15 [Source: ICIS news]
(adds comments from analyst, with recasts throughout)
By Peh Soo Hwee
Weak market conditions in the derivative polymer markets also prompted the company to cut its ethylene output, the source said.
The operating rate of Sinopec’s crackers was reduced to around 90% in November from an average run rate of 95% in October, said the source without elaborating on details.
The company operates 13 crackers either on its own or through joint ventures.
Sinopec is producing more diesel at the expense of light distillates, such as gasoline and naphtha, to ease the supply shortage in the Chinese market. This meant lesser naphtha output to feed into its crackers for petrochemical production.
A diesel shortage has been spreading across
State-owned PetroChina had also said earlier on that it has increased the volume of its diesel production and imports to help out ease the fuel supply situation.
“Chinese refiners have the capability to meet the country’s diesel demand if they run at high rates,” said Victor Shum, managing consultant at Purvin & Gertz in
“But when there is a disconnect between international crude oil prices and domestic fuel prices, there may not be sufficient economic incentives for the Chinese refineries to maintain high crude processing rates, which may have led to the current diesel supply tightness.”
Fuel prices in the domestic Chinese market, however, remains largely regulated. Under the existing pricing mechanism,
Meanwhile, Sinopec's move to cut its ethylene output this month was largely in line with measures taken by most naphtha cracker operators in
Ethylene margins, based on naphtha feed, in northeast
“(Cracker) economics are still pretty poor,” said a regional olefins trader.
“Downstream products are still weak, and customers are saying their own product prices are still falling,” he added.
Additional reporting by Angie Li and
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