13 June 2013 10:57 [Source: ICIS news]
Correction: In the ICIS news story headlined “S Korea's Lotte Chemical plans run rate cuts at Ulsan PX/OX unit" dated 13 June 2013, please read in the second paragraph 230,000 tonnes/year…instead of…79,000 tonnes/year…A corrected story follows.
SINGAPORE (ICIS)--South Korea’s Lotte Chemical is planning to reduce the run rate at its paraxylene (PX)/orthoxylene (OX) unit in Ulsan in the second-half of June, a company source said on Thursday.
The facility has a nameplate capacity of 775,000 tonnes/year of PX and 230,000 tonnes/year of OX, according to ICIS data. The unit has two production lines for each product.
“We are going to reduce our operating rates for OX from 90% to 60% in the second-half of the month as the spread between isomer-grade xylene and OX has narrowed on poor [downstream phthalic anhydride (PA)] demand,” the source said.
At the same time, the unit’s PX production rate would be cut to 80% from current run rates of 100%, according to the source.
Isomer-grade xylene prices were at $1,200-1,210/tonne (€900-908/tonne) FOB Korea while OX was assessed at $1,360-1,390/tonne FOB Korea as of 7 June, according to ICIS data.
The isomer-grade xylene/ OX spread stands at $170/tonne. For most producers, the breakeven point for the isomer-grade xylene/OX spread is at around $150-180/tonne, the data showed.
OX prices have been on the downtrend since 19 April on the back of poor demand from the downstream PA sector, it showed.
Some PA plants underwent catalyst changes in May and would only be fully operation by end-June, according to market participants.
In addition, several PA producers in China had previously reduced operating rates in an attempt to minimise losses due to poor derivative plasticizer demand, they said.
A bleak outlook for the downstream PA sector coupled with poor global macroeconomics and weak Chinese purchasing managers’ index (PMI) data also dampened sentiment among PA makers, according to market players.
Demand for PA products have remained weak since the second quarter of 2012, a China-based end-user added.
($1 = €0.75)
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