Sinopec-China's largest state owned oil refiner - will reduce its ethylene output by 12% in July. However, according to an analyst, the move will not result in a considerable rise in downstream polyethylene prices. Sinopec uses major share of ethylene produced for captive consumption. According to an analyst, Sinopec is the largest consumer of its ethylene production and so the profits made on ethylene are minimal as compared to its ever-growing trade in refined oil. As a result, Sinopec cut ethylene output by 65000 tons in June, allowing it to boost output of oil products by 200000 tons.
As a result of tightening diesel supplies in China, the production of ethylene - which uses light diesel as the feedstock-is being curtailed. Sinopec announced it would lower its June ethylene output by 65000 tons after the PE prices fluctuated around RMB 16000 in recent weeks, having skyrocketed from RMB 14000 per ton in May to RMB 20000 per ton in June.
Further, Sinopec's output of synthetic resin-another downstream petrochemical product of ethylene is also expected to drop this month. It has also put on hold, the production in ethylene plants managed by it's subsidiaries - Shanghai Petrochemical Co. Ltd., Zhongyuan Petrochemical Corp. and Beijing Eastern Chemical Works. The company is currently revamping two cracking furnaces at its Maoming ethylene plant, which was ravaged by fire on June 3, according to sources.