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Yisheng Petrochemical Shuts Older PTA Plant in China Amidst Pressured Margins

Yisheng Petrochemical Shuts Older PTA Plant in China Amidst Pressured Margins

  • 30-Jun-2021 2:00 PM
  • Journalist: Harold Finch

On Tuesday, 29th June Zhejiang Yisheng Petrochemical announced the permanent closure of its oldest 650 KTPA Purified Terephthalic Acid (PTA) No.1 line at its Ningbo site located in East China’s Zhenjiang province.

The plant shutdown is majorly caused by narrowed production margins amidst continuous addition of new PTA capacities in China which consume less feedstock and ensure better operating efficiency and production margins than the older PTA units in China. The breakeven cost for the old PTA plants in China is around USD 108 per tonne, much higher than the cost required in larger and newer plants which is around USD 63 -77 per tonne.

It is anticipated that the Chinese PTA market will witness more such plant closures in the upcoming period along with the planned start-ups of new PTA facilities in China. Yisheng Petrochemicals will add two more PTA lines with a combined capacity of 6.6 million mt/year, of which one PTA line of 3.3 million MT capacity will be commissioned in July while the other will come onstream by the end of 2021. It is estimated that a total of seven new PTA units with a combined capacity of 18 million tonnes per year will be commissioned within 2021 in China.

A new round of shutdowns in older PTA units is being observed since March 2021. In early April, Sinopec Yangzi shut down its 300 KTPA PTA facility located in Nanjing city of Jiangsu province, whereas the production lines of Zhenjiang Reignwood and Ningbo Liwan have remained stalled since March.

As per ChemAnalyst, since mid-April, polyester plant operating rates in China have been high and the demand is gradually recovering, however, new PTA capacities are likely to weigh over margins in longer terms. As per market experts, PTA prices trace the movement across Paraxylene (PX) and crude oil. Driven by soaring PX price, PTA CFR China price surged to $700/mt in the previous week and producers are likely to maintain a cautious stance for demand outlook for the rest of 2021.

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