China’s Xingxing cuts MTO rates as demand weakens

OREANDA-NEWS. September 03, 2015. China's Zhejiang Xingxing Chemical has cut operating rates at its 690,000 t/yr methanol-to-olefins (MTO) plant by half to 50pc since 30 August because of a slowing economy and weaker demand.

Chinese coastal merchant MTO margins turned negative two weeks ago, Argus data show. Losses increased to \\$19/t in the week ending 28 August, compared with average margins at a positive \\$38/t so far this year.

Margins last turned negative in March, just before Xingxing started its MTO plant in early April.

Ethylene and propylene prices have fallen further than feedstock methanol prices in recent months, eroding merchant MTO margins.

Asia-Pacific ethylene prices slumped to the low-\\$800s/t cfr northeast Asia this week, down by as much as 42pc from a recent high of \\$1,380-1,440/t cfr China in mid-June. Discussion levels for propylene fell by 28pc in the same period to \\$710-730/t cfr northeast Asia.

Feedstock methanol prices on a cfr China basis have fallen by 28pc since mid-June to \\$220-235/t cfr China in the week ending 28 August, while ex-tank based prices dropped by 22pc to 1,820-1,980 yuan/t (\\$286-311/t) over the period.

Xingxing has been running its new MTO plant at high and stable rates of about 80-100pc since it came on line in April. The plant at Jiaxing in Zhejiang province has the capacity to produce 300,000 t/yr of ethylene and 390,000 t/yr of propylene.

A derivative ethylene oxide/monoethylene glycol (EO/MEG) swing unit is integrated with the MTO plant. Xingxing has maintained MEG production at about 20,000 t/month or about 80pc of the unit's capacity using stockpiled ethylene.

Xingxing's MTO production cut will reduce methanol demand by 75,000 t/month and has already stemmed the recent rise in methanol prices, which have been supported by stronger crude futures. Ex-tank methanol prices in China fell to about Yn1,900/t in Jiangsu province today, down by Yn50-80/t from 28 August.