China’s Jiangsu Sinorgchem cuts rubber chemical op rate

08 May 2012 09:22  [Source: ICIS news]

MELBOURNE (ICIS)--China’s Jiangsu Sinorgchem Technology has cut its overall paraphenylenediamine (PPD) operating rate by nearly 10% to about 85% capacity this month due to high feedstock costs, a company source said on Tuesday.

Near-record feedstock methyl isobutyl ketone (MIBK) prices, together with a slight softening in demand from tyre makers for rubber chemical additives, have prompted the company’s decision to reduce its PPD output, the source said.

The company may further curtail its PPD operating rate in June, should MIBK prices strengthen further, because Sinorgchem is facing difficulty in fully transferring the increase in the feedstock costs to its downstream buyers, the source added.

Jiangsu Sinorgchem is China’s largest producer of PPD, which is a key rubber chemical additive used in the manufacturing of tyres.

Spot MIBK prices have outpaced the gains in feedstock acetone prices to reach about $2,000/tonne (€1,540/tonne) CFR China, fast approaching the record high reached in August 2008.

MIBK’s all-time high was at an average of $2,175/tonne CFR China for the weeks ended 12 August, 19 August and 26 August 2008, according to ICIS data.

MIBK prices have risen 25.4% this year because of tight supply in China and increased demand from the rubber chemicals sector, following a capacity expansion by Sinorgchem.

Upstream acetone prices have gained 11% percent this year to reach an average of $1,050/tonne CFR China for the week ended 4 May, according to ICIS data.

Jiangsu Sinorgchem operates two PPD plants in Shandong province, which have a combined capacity of 100,000 tonnes/year following a capacity expansion earlier this year.

The two PPD plants in Shandong, named Sinorgchem Tai’An and Shandong Sinorgchem International, consume about 3,000 tonnes of MIBK a month at full operating rates.

Sinorgchem operates a third rubber chemicals plant in China’s Anhui province. The plant, named Anhui Sinorgchem Technology, does not produce PPD or uses MIBK as a feedstock.

($1 = €0.77)

By: Trisha Huang

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