Producers slash run rates across the production chain
Recent news about cutting run rates has been particularly obvious in Asia. The decision to lower operating rates has come on top of 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 three million tons of ethylene and one and half million tons of propylene per year 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 tons/year of ethylene and 970,000 tons/year 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 tons/year propylene capacity.
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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 tons/year cracker to mid June. Malaysian Titan also reported lowering its operating rates at its 442,000 tons/year No 1 cracker to 90%. The crackers respectively have propylene production capacities of 160,000 tons/year and 260,000 tons/year. A Thai producer, IRPC, was also mulling over lowering its run rates by 15-20% at its 312,000 tons/year propylene plant in June.
Downstream, lower operating rates have also been announced. Formosa has recently revealed that they will continue to run their 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 tons /year LLDPE plant in June due to poor margins. Hong Kong Petrochemical is running its GPPS line at lower rates at its 140,000 tons/year plant while South Korea’s Kumho is planning to reduce its HIPS run rates by 15% this month at its 158,000 tons/year line. Thin demand has also caused Vietnam Polystrene to delay the restart of its 50,000 tons/year HIPS line while the producer is running the GPPS line with same capacity at 50%.
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In the PVC market, many producers are reducing their operating rates in an effort to combat weak demand while China’s Suzhou already shut its 130,000 tons/year PVC plant on May 30 for ten days for the same reason. Tianjin Dagu has been running its 80,000 tons/year PVC plant at 80% since May 22. Tangshan Sanyou also decided to cut its 300,000 tons/year 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 tons/year 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 tons/year PVC plant.
When looking at Europe, lower run rates are not as widespread as in Asia. There are 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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