Narrow orthoxylene margins over feedstock isomer-MX has forced a
Taiwanese producer to consider cutting production below 30%, and another South
Korean producer to shut the plant, company sources said Friday.
While a source at Taiwan's Formosa Chemical & Fibre Corporation, the
largest producer of OX in Asia, said that the company may reduce the run rate
of its 440,000 mt/year plant at Mailiao to less than 30% in a few days, a
source at South Korea's KP Chemical said that the company is considering
shutting one or both of its 50,000 mt/year and 170,000 mt/year OX plants in
Ulsan for two weeks.
"We are not offering spot OX cargoes and are instead directing
everything we produce to the Nan Ya Plastics PA [phthalic anhydride] plant in
Mailiao," a source at FCFC said.
Nan Ya Plastics, a sister concern of FCFC, runs a 100,000 mt/year PA
plant in Mailiao.
On the other hand, the source at KP Chemical said that the company will
consider shutting its plant based on whether it is able to buy enough OX cargo
volumes from the market to be able to meet its contract commitments.
According to Platts calculations, 0.96 mt of OX serves as a feedstock for
1 mt of PA. This would mean that to produce 75,000 mt/year of PA, Nan Ya
will require 72,000 mt/year of OX. Having cut the run rate of its Mailiao
plant to 30%, FCFC is now estimated to be producing 132,000 mt/year of OX.
FCFC had last slashed its production from 50% to 30% of its capacity on
OX prices hovered at $1,195-1,200/mt CFR China Thursday. Platts
assessed Isomer-MX at $1,092/mt FOB Korea and at $1,107/mt CFR Taiwan
Thursday. FCFC is known to seek a spread of $150/mt between OX and its
feedstock isomer-MX. However, the spread has fallen to less than $90/mt this
week, Asian traders said.
--Shashank Shekhar, email@example.com
Similar stories appear in Platts Asian Petrochemical Scan.
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