China's Jiangsu Sopo may cut acetic acid output on thin margins

02 March 2012 08:19  [Source: ICIS news]

SINGAPORE (ICIS)--China’s Jiangsu Sopo Chemical is mulling operating rate cuts at its 1.2m tonne/year acetic acid plant at Zhenjiang in Jiangsu province to 50% of capacity, from the current 70%, because of high inventories and squeezed margins, a company official said on Friday.

“Our cost of production has risen by around yuan [CNY] 50-60/tonne [$8-10/tonne] because the methanol feedstock cost rebounded by CNY100/tonne this week but downstream demand for acetic acid remains weak and our inventories are high,” he said.

Domestic acetic acid transactions in east China were concluded lower for a second straight week at CNY2,750-3,050/tonne ex-tank by Friday, down by CNY50/tonne at the high end of the range as supply outstripped demand.

If market conditions remain poor, the company may bring forward a planned plant turnaround that was scheduled to take place in May or June, as a new plant is scheduled to come on stream in the second half of March, the company source added.

Acetic acid is widely used in textile, pharmaceuticals and pesticide production. It is mainly used to produce vinyl acetate monomer (VAM), purified terephthalic acid (PTA), acetic anhydride and acetate esters. These derivatives are used in the production of coatings, adhesives, polyester fibers, pharmaceuticals, foods, dyes and plastics products.

($1 = CNY6.30)

By: Helen Lee
+65 6780 4359

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