China PTA makers to cut December output to stem price fall

Angeline Zhang

28-Nov-2014

Focus article by Angeline Zhang

Textiles are downstream products of PTASINGAPORE (ICIS)–Major purified terephthalic acid (PTA) producers in China will cut production next month to tighten supply in the domestic market and prevent a further slide in their product prices, industry sources said on Friday.

PTA in the Chinese domestic market has declined 27% since the start of the year to early November, when prices hit yuan (CNY) 5,295/tonne ($862/tonne) – the lowest recorded since 2011, according to Chemease, an ICIS service in China.

On Friday, negotiations are at yuan (CNY) 5,500/tonne, down from CNY5,570/tonne in the previous day.

Yisheng Petrochemical, the country’s biggest PTA producer plans to shut down two its plants – one at Ningbo in Zhejiang province and another at Dalian in Liaoning province – next month, the company said. It did not specify the capacities of the units that will be taken off line and the duration of the shutdown.

The planned shutdowns will lead to a production loss of 240,000 tonnes in December, a company source said.

Yisheng has four PTA plants in Ningbo with a combined capacity of 5.75m tonnes/year, two of which with a combined capacity of 1.3m tonnes/year have been idled. Two plants with a combined capacity of 5.95m tonnes/year are in Dalian, while a 2m tonne/year plant is located in Hainan province.

The company said that its plants will run at an average rate of no more than 50%, down from 70% in November.

Meanwhile, a 2.2m tonne/year PTA unit in Dalian operated by Heling Petrochemical is also due to shut in early December for half a month, a company source said.

Xianglu Petrochemical is also expected to take of 1.65m tonne/year plant at Xiamen in Fujian province plant next month, market sources said, but this was not confirmed by the company.

The heavy shutdown schedule next month would tighten PTA supply in the domestic market and help ease the downward pressure on prices, market sources said.

China’s average PTA run rate in December is expected to decline to below 60%, down from 70% in the previous month, according to estimates from Chemease, an ICIS service in China.

($1 = CNY6.14)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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