Producers slash run rates across the production chain globally

07-Jun-12
In Asia and Europe, many producers have slashed run rates across the production chain in an attempt to bring supply back into balance with persistently sluggish demand while both monomer and polymer prices continue to see considerable losses on a weekly basis, as per ChemOrbis. Numerous cracker operators as well as downstream producers are reporting a reduction in their run rates, particularly in Asia. The decision to lower operating rates follows several existing shutdowns for scheduled and unscheduled maintenance. Taiwan’s Formosa reported cutting its operating rates at its three crackers with a total capacity of around 3 mln tpa of ethylene and 1.5 mln tpa of propylene to 80% until June 20. The producer had initially reduced its rates to 90% in early May. South Korea’s YNCC also decided to run its three crackers with a total capacity of 1,910,000 tpa of ethylene and 970,000 tpa of propylene at 90% for a month. South Korea’s SK Innovations also reduced its run rates to 70% at its No 1 cracker with 140,000 tpa propylene capacity. Japan’s Mitsubishi was considering lowering its operating rates to 80-90% at its No 2 cracker with an ethylene capacity of 476,000 tons in June for a month. Another Japanese producer, Showa Denka, also delayed the restart of its 695,000 tpa cracker to mid June. Malaysian Titan also reported lowering its operating rates at its 442,000 tpa No 1 cracker to 90%. The crackers respectively have propylene production capacities of 160,000 tpa and 260,000 tpa. A Thai producer, IRPC, was also mulling over lowering its run rates by 15-20% at its 312,000 tpa propylene plant in June. Downstream, lower operating rates have also been announced, as per ChemOrbis. Formosa has recently revealed that it will continue to run two PP plants in China and Taiwan at 25% capacity due to poor margins. Thailand’s PTT Global Chemical was also considering shutting its 300,000 tpa LLDPE plant in June due to poor margins. Hong Kong Petrochemical is running its GPPS line at lower rates at its 140,000 tpa plant while South Korea’s Kumho is planning to reduce its HIPS run rates by 15% this month at its 158,000 tpa line. Thin demand has also caused Vietnam Polystrene to delay the restart of its 50,000 tpa HIPS line while the producer is running the GPPS line with same capacity at 50%. Many PVC producers are reducing their operating rates in an effort to combat weak demand. China’s Suzhou already shut its 130,000 tpa PVC plant on May 30 for ten days, Tianjin Dagu has been running its 80,000 tpa PVC plant at 80% since May 22, Tangshan Sanyou also decided to cut its 300,000 tpa acetylene based PVC plant’s run rates to 70%. As of May, Vietnam’s TPC Vina reduced its operating rates at its two PVC lines with a total capacity of 190,000 tpa to 50-60% owing to squeezed margins while the producer was thinking of further run cuts in June if necessary. Likewise, Indonesia’s TPC Indorama reported similar reasons and run rates at its 120,000 tpa PVC plant. Even Europe has seen several planned and unplanned shutdowns at crackers and derivative units while Sabic is reported to be running its cracker in the UK at lower rates due to technical problems. Nevertheless, regional players report that many cracker operators have slashed their operating rates, heard at around 75-80%, in order to adjust to poor demand although they have not confirmed the reports. In the downstream chain, producers are believed to be following suit. An official distributor of a West European PVC producer in Italy said, “We have less availability this month as our supplier has reduced its operating rates due to lethargic demand across Europe.”
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