11 April 2013 13:49 [Source: ICIS news]
LONDON (ICIS)--Poland-based Zaklady Azotowe Kedzierzyn (ZAK) has ruled against restarting its idled MA production, despite a reduction in the upstream April benzene contract price, because of ongoing concerns over upstream price volatility and following no real signs of a seasonal pick-up in MA demand, a company source said on Thursday.
ZAK had recently mulled over a possible restart of its 8,000 tonne/year MA plant in Kedzierzyn-Kozle, Poland, depending on whether market conditions improved. The MA plant uses benzene as a feedstock.
The source said ZAK had evaluated the feedstock situation and although upstream European April benzene contract costs had settled down by €62/tonne ($81/tonne) to €992/tonne FOB (free on board) northwest Europe (NWE), the company was not sure whether this would be indicative of a more sustainable trend or something more temporary, particularly in view of heightened upstream volatility over recent months.
The source said ZAK was concerned upstream benzene costs would remain high – which it considered to be over €1,000/tonne FOB NWE and if so “it would be difficult to restart its MA unit this year.”
ZAK stopped its MA production almost a year ago because of poor economics - related to high upstream benzene costs.
On top of costs, demand has also been a consideration in determining whether to restart the idled MA facility. The source said: “MA into UPR [unsaturated polyester resin] is not good.”
Demand has been weak on the back of a prolonged winter period and although the source did expect some seasonal improvement over the next few weeks and months, as yet there is no evidence of this happening. The source added any pick-up would be gradual and weighed against the ongoing soft economic climate.
“We continue to monitor the situation to restart (the MA) production, but we need actions on both sides, we need downtrend on benzene (costs) and pick up in MA demand,” said the source.
Italy-based Polynt, another MA producer, which idled one of its benzene-related MA units in Scanzorosciate, Bergamo, at the end of 2012, has also given similar economic and market related reasons for not resuming output at its unit.
The company said it continues to monitor these factors before reaching a decision. The nameplate MA capacity at the site is 35,000-36,000 tonnes/year, according to the company.
Polynt has its main MA facility running in Ravenna, which uses n-butane as a feedstock. The unit has the capacity to produce up to 65,000 tonnes/year, according to the company.
There have been no reports from buyers of any adverse impact on supply for MA liquid from the idled benzene-related MA units. This is because demand has been poor and most MA production in Europe is based on butane feedstock rather than benzene.
MA flake, however, has been tight over recent months but this has been due to a lack of imports rather than any offline MA capacity in Europe.
($1 = €0.77)
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