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China's two major purified terephthalic acid makers to cut run rates to 80% amid thin margins

https://www.chemnet.com   Jul 03,2015 Platts
China's two major purified terephthalic acid producers -- Zhejiang Yisheng Petrochemical Co. and Hengli Petrochemical -- announced plans to cut production rates due to thin margins, sources close to the companies said Thursday.

The announcement by China's two biggest PTA producers Thursday have resulted in a sharp upsurge in PTA futures on the Zhengzhou Commodity Exchange.

The prompt September PTA futures contract on the exchange closed up Yuan 122/mt at Yuan 5,068/mt Thursday.

While the Chinese domestic PTA price fell to Yuan 4,775/mt prior to the announcement but has rebounded to Yuan 4,900-4,950/mt Thursday.

Zhejiang Yisheng Petrochemical Co. will cut run rates at two of its PTA plants in Dalian to 80% effective Thursday, while Hengli Petrochemical will cut rates to 80% at three of its PTA plants also in Dalian, sources close to the two companies said.

Zhejiang Yisheng's two PTA facilities at Dalian have a combined capacity of 5.95 million mt/year -- the No. 1 PTA unit with 2.2 million mt/year and the the No. 2 unit with 3.75 million mt/year.

Both units were operating at 95% prior to the production cut, said a source close to the firm.

Meanwhile, Hengli Petrochemical's two PTA plants in Dalian with total capacity of 4.4 million mt/year were operating at nearly 100%, and the new 2.2 million mt/year unit was operating at around 90%, said the source.

Zhejiang Yisheng has three more PTA plants which are located in Ningbo -- a 2 million mt/year unit, a 2.2 million mt/year unit and a 650,000 mt/year unit.

All three are operating at near full capacity currently, said the source.

Asian PTA prices have stayed firm since April 7, following the explosion at Dragon Aromatics plant in Zhangzhou.

But in recent weeks prices had dropped due to weak downstream demand from polyethylene terephthalate and polyester makers.

Since April 7, Asian PTA prices have climbed 15.5% or $95/mt, and was assessed at $705/mt Wednesday, data showed.
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