China‘s Henan Shunda shuts Zhumadian acetic acid plant on high stock

02 March 2012 09:20  [Source: ICIS news]

SINGAPORE (ICIS)--China’s Henan Shunda shut its 400,000tonne/year acetic acid plant at Zhumadian in Henan province on 2 March because of high inventory levels, a company source said on Friday.

“The plant is [scheduled] to be shut for about 20 days,”  the source said.

The producer was operating the plant at around 85% capacity before the shutdown because of weak market conditions, the source said.

Most Chinese acetic acid producers are struggling with high inventory levels as demand has been bearish, according to industry sources.

The prolonged weak demand did not recover following the Lunr New Year holiday as expected, while supply grew.

The prices of acetic acid are at yuan (CNY) 2,750-3,000/tonne ex-tank east China, according to ICIS data. The domestic methanol prices at CNY2,920-3,040/tonne has made the production of acetic acid uneconomical, the data showed.

“It is expected that more and more producers will cut their operating rates or shut [their plants] if the prices decrease further and demand [is unable to] rebound,” a major trader in Jiangsu province said.

Major acetic acid producers in China include US-based Celanese and China’s BP YPC Acetyls Company (BYACO), Shanghai Wujing Chemical, Yankuang Cathay Coal Chemicals, Hebei Chung Shun Chemical and Hualu Hengsheng Chemical.

($1 = CNY6.30)

By: Sandra Shen

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