Singapore (Platts)--5Feb2013/534 am EST/1034 GMT

Dragon Aromatics' startup of its 800,000 mt/year paraxylene plant in China's Fujian province may not proceed as planned in March due to regulatory scrutiny about changes to its feedstock mix, some market sources said Tuesday.

China's Environmental Protection Bureau said in a statement January 21 that it was ordering Dragon Aromatics to stop the startup process of its new PX plant until the end of February, so that it could look into the company's decision to change the plant's feedstock from heavy naphtha to condensate.

"If the Chinese government does not approve the usage of condensate as feedstock, the commercial operation [of the plant] in March will likely be delayed to Q2," a trader based in China said.

However, other market sources said Dragon Aromatics' startup schedule for the plant in Gulei city was on track for March, as the company has already paid a penalty of around Yuan 200,000 ($31,800) to the government and resolved the issue.

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When contacted Tuesday, officials at Dragon Aromatics declined to comment on the issue.

"There are still uncertainties remaining regarding its startup schedule, as the Chinese government could get involved in other issues..." a trader based in Shanghai said without providing details.

The startup of the plant has been delayed several times due to reasons such as regulatory approval, construction delays and feedstock procurement issues.

Platts reported January 29, citing a company source, that the plant was scheduled to come online in March. The source said then that condensate would be the main feedstock for the plant, but that isomer-grade mixed xylenes would also be used. The company is expected to buy about 30,000 mt/month, or 360,000 mt/year of isomer-MX via more than 3 suppliers, including 10,000 mt/month each from Sinopec and PetroChina.

--Michelle Kim, mihee_kim@platts.com
--Edited by Deepa Vijiyasingam, deepa_vijiyasingam@platts.com

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