Hengli Petrochemical took its 2.5 million metric tons per year purified terephthalic acid plant in Huizhou, Guangdong Province, offline on Saturday for a two-week maintenance turnaround, industry sources said. The company has another 2.5 million mt/year PTA plant at the same site, currently operating at full capacity.
Soaring feedstock costs and naphtha shortages, fueled by instability in the Middle East, have stifled downstream polyester demand, prompting plants in China to scale back production. According to OPIS data and industry sources, the average Chinese polyester plant operating rate fell 12.9 percentage points year on year to 81.9% on May 8. Similarly, the average Chinese PTA plant operating rate slipped 13.4 percentage points over the same period to 77.7%.
The decline in production volume during the traditional June peak suggests a counter-seasonal contraction, signaling that the Chinese polyester industry is in a state of contraction and failing to meet annual growth expectations.
The average 10-day cash margin of polyester fiber products, such as partially oriented yarn, fully drawn yarn and drawn textured yarn, remained low at 113 yuan ($16.63), 86 yuan and 105 yuan, respectively, while that of polyethylene terephthalate bottles was significantly higher at 1,048 yuan, an industry source said.
This suggests that while margins in the polyester fabric sector remain thin, the PET bottle segment is seeing a margin expansion, bolstered by peak seasonal demand for bottled beverages.
Apart from the Huizhou PTA plant turnaround, the company's No. 3 2.2 million mt/year PTA plant and No. 5 2.5 million mt/year PTA plant in Dalian were taken offline on April 20 and April 25, respectively, for prolonged maintenance with an undetermined startup date. Hengli's No. 4 2.5 million mt/year PTA plant in Dalian has restarted following an earlier maintenance which commenced on April 9, industry sources added.
The company recently denied allegations of trading Iranian oil following U.S. sanctions issued on April 24. Hengli Petrochemical (Dalian) Refinery has since restructured the ownership of its Singapore trading arm, Hengli Petrochemical International, transferring it to Dalian Changxing International Trade Co. China's Ministry of Commerce issued a blocking order on May 2, effectively nullifying the U.S. sanctions for the firm and its affiliates.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Serena Seng, sseng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com
(END) Dow Jones Newswires
05-11-26 2329ET
