China petrochemical trades to thin out ahead of October holiday

SINGAPORE (ICIS)–Petrochemical trades in China are expected to thin out amid mandated production curbs and logistics restrictions put in place as the nation marks its 70th founding anniversary in October.

A helicopter carrying the Chinese flag flies above Beijing’s central business district. A large military parade is expected to be conducted  in the capital on 1 October to commemorate the 70th anniversary of Communist China. (Photo by Mark Schiefelbein/AP/Shutterstock)

Production facilities near Beijing have either started running at low rates or shut down in the weeks leading to China’s National Day celebration in the capital on 1-7 October.

Spot prices of petrochemicals in China have been on an uptrend in September amid concerns of supply reduction amid re-stocking ahead of the holidays. For polyesters, demand is seasonally strong in September.

Sharp fluctuations were registered this week in the wake of the attacks on Saudi Arabia’s refineries on 14 September.

As early as July, enterprises emitting volatile organic compounds (VOC) in Beijing, Tianjin and Tangshan were directed to start cutting production from August, and gradually shut down.

It was meant to ease pollution in these heavily industrialised sites in east China, ahead of the major national holiday.

Companies which fail to comply with the government directives risk electricity being cut off at their plants, among other penalties.

ICIS learned that only a few petrochemical companies received instructions in August to cut production, including Celanese, which was required to cut output at its Jiangsu site by half.

Celanese had negotiated in August the schedule of implementation of the production cut, as it had been running the site at comparatively low rates for some time, a company source said.   

The company produces vinyl acetate monomer (VAM), acetic acid, acetic anhydride and vinyl acetate ethylene (VAE) at the site.

A VAM producer in the same province was directed to operate at around 70% of capacity, while Sinopec Beijing has cut VAM production by half as of September, while coal chemicals plants are arranging scheduled maintenance, market sources said.

Some cities in Jiangsu, which were failing to meet their respective pollution targets this year, are being required to implement deeper production cuts.

For companies based in north China, output cuts and emissions reduction were mandated from 1 September.

In early August, the Ministry of Ecology and Environment issued guidelines on reducing emissions at major cities and provinces.

Air quality in Beijing is mostly affected by industries within the city as well as surrounding areas of Tianjin and 26 other cities in the provinces of Hebei, Shanxi, Shandong and Henan.

The guideline stresses differentiated measures for companies with different emission levels, indicating a comparatively flexible implementation of production cuts or plant shutdowns.

In a notification issued on 30 August, the ministry set out implementation details for the key polluting areas to help keep each other in the blue-sky campaign.

Lianyungang city in Jiangsu province, which is located near Yancheng – the site of the fatal March 2019 blast at a petrochemical plant – declared that for the specific period from 20 September to 10 October, any plant maintenance or restart would be prohibited as a safety measure during the holiday period.

No trial production on new facilities will be approved before 10 October, while operations of chemical plants with records of accidents will be discontinued. For those plants that have stopped operation, high-risk materials should be cleared from the site before mid-September, according to the city’s safety committee.

To ensure safety and emissions reduction during China’s major celebration, transportation restrictions for chemicals were also put in place.

No trucks will be allowed on a huge swathe of Beijing – up to the sixth ring road from the city centre – from 20 August to 10 October, an industry source said.

In northeast China, the provinces of Liaoning, Jilin, Heilongjiang and Inner Mongolia announced on 18 September a halt in transport of dangerous goods, including chemicals, between 28 September to 2 October.

Focus article by Yvonne Shi

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