CMMFC to resume production at MEG plant in Indonesia after maintenance

MOSCOW (MRC) -- China Man-Made Fiber Corporation (CMMFC) plans to resume production at its monoethylene glycol (MEG) plant in Kaohsiung, Taiwan, after maintenance, a company source told TPS.

The unit, which has an annual capacity of 200,000 mt/year, was taken off-stream in early January 2016, and will likely restart towards the end of January, before the Chinese festive period.

Assuming the unit runs at full capacity and the shutdown lasts for 25 days, TPS estimates the stoppage would result in a production loss of 13,698 mt of MEG. This equates to about 13 standard MEG parcels.

As MRC informed previously, in the first decade of October 2015, CMMFC shut operations at its MEG plant in Taiwan for a maintenance turnaround. It was scheduled to remain shut for around 8 weeks. Located at Kaoshiung in Taiwan, the MEG plant has a production capacity of 200,000 mt/year.

ChemChina buying KraussMaffei for USD1.01 billion

MOSCOW (MRC) -- KraussMaffei Group, a major global plastics machinery company, will soon have a new owner: state-owned China National Chemical Corp., said Plasticsnews.

KM, ChemChina and Onex Corp., the Toronto-based private equity firm that has owned KM since 2012, announced the deal Jan. 10. ChemChina highlighted that this is single largest investment that a Chinese company has ever made in Germany.

In their announcements, both ChemChina and KM CEO Frank Stieler described the prospective new owner as a long-term investor — a contrast from KM’s last two private equity ownership groups. KM will continue to operate in its current corporate structure, and will remain in Munich, he said.

ChemChina, a state-owned-enterprise, said its existing machinery subsidiary — China National Chemical Equipment Co. Ltd. — and KraussMaffei have complementary product portfolios and markets. In addition, they are strategically and organizationally aligned with compatible management and cultures, allowing for significant synergies.

ChemChina claims to be China’s largest exporter of rubber machinery.

ChemChina Chairman Ren said the company is investing in KM’s strong management team and technological expertise. In China, the company will benefit from a trend toward processors buying higher quality and more efficient plastics machinery.

As a result of the transaction, KM will "accelerate its planned expansion in China," the companies said in the release, adding that the company’s operating and corporate responsibility "will stay in Europe." The company plans to increase its employment in Germany in 2016.

As MRC informed earlier, China National Chemical (ChemChina) signed a memorandum of understanding (MoU) with Rosneft to acquire a majority stake in Far-East Petrochemical Company (FEPCO) project in Nakhodka, Russia.

KM currently has 4,500 employees globally, including 2,800 are based in Germany. KM has been headquartered in Munich since 1838.

ChemChina is China’s largest chemicals group, with sales of 37 billion euros and 140,000 employees. The company ranks 265th on the Fortune 500 list, and No. 9 in global chemicals.

ChemChina’s publicly listed subsidiary Tianhua Institute of Chemical Machinery and Automation said in a filing that KraussMaffei’s business has a certain competitive relationship with its plastics processing technology business — extrusion and reaction molding. Tianhua said ChemChina will follow the non-competition agreement that was previously reached to handle the issue.

Tianjin Bohai shut PDH plant in China

MOSCOW (MRC) -- China’s Tianjin Bohai Chemical Industry Group shut its propane dehydrogenation (PDH) unit on January 10, 2016, market sources told TPS.

Located in Tianjin, the PDH plant has a capacity of 600,000 mt/year of propylene.

"Hopefully this will provide some respite to falling propylene prices," the source added.

As MRC informed before, in early 2014, Tianjin Bohai Chemical Industry Group took off-stream its PDH unit in Tianjin owing to technical issues. Thus, the unit was shut on January 12, 2014.

Tianjin Bohai is a state owned enterprise, with over 100 subsidiaries and 35,000 employees. It has joint venture relationships with a number of foreign partners, including: LG Chem, Solvay, Akzo Nobel, Clariant, Veolia, Air Liquide and Vopak.

South Korean government urges PTA makers to cut production by 30%

MOSCOW (MRC) -- South Korea’s purified terephthalic acid (PTA) producers have been urged to reduce production by 30% amid worsening market conditions, according to the government’s industrial restructuring plan.

The country’s petrochemical industry is one of the five industries that was recommended by the government to undergo restructuring, along with shipping, shipbuilding, steel and construction sectors.

Since October 2015, the South Korean government has been pushing ahead with its plan for restructuring industries that have suffered from macroeconomic uncertainty including the slowdown of the Chinese economy and the US Federal Reserve’s interest rates hike.

Against this backdrop, South Korea’s petrochemical industry was seen severely affected by China’s growing self-sufficiency for petrochemical products over the last couple of years, as it directly led to lacklustre exports.

In particular, the country’s PTA makers, once one of the world’s biggest producers and exporters, have encountered stiff competition due to a series of mega-PTA plants that started up in China in recent years.

As such, South Korea’s PTA makers have been suffering from operating loss since 2012, and the cumulative deficit over the last four years is estimated to be at USD747.53 million (KRW 845 billion), according to the Financial Services Commission.

The global oversupply of PTA is likely to sustain and the country’s competitors have already taken steps to reduce the production.

For instance, Japan’s PTA makers are expected to reduce production by 1.2 million mt this year, while Taiwan’s China American Petrochemical Co. (CAPCO) had scrapped its 800,000 mt/year of PTA plant in March 2015.

"Following a series of meetings with PTA producers, we have reached a conclusion that the oversupply issues will persist until 2019-2020, weighing on demand growth," said Mr Kim Yong Bum, Director of the Financial Services Commission.

Consequently, as part of the restructuring plan, the government will encourage PTA makers to reduce production by 30% or 1.5 million mt via voluntary reduction or scrapping of the existing facilities.

As MRC reported earlier, in August 2015, The Ministry of Commerce, Government of China, announced it would review anti-dumping duties on PTA imported from South Korea and Thailand. Anti-dumping duties ranging between 2 and 20.1% were imposed on PTA imports from these two countries in August 2010, for a period of five years. The ministry's decision to review these duties follows an application made by domestic producers in June last year requesting the ministry to reinvestigate the case and extend the duties which were due to expire.

Petro Rabigh to take USD79.92 million cost hit in 2016 amid gas hikes

MOSCOW (MRC) -- Saudi Arabia's Petro Rabigh expects to take a Saudi Riyal 300 million (USD79.92 million) cost hit amid gas prices hikes starting 2016, reported TPS with reference to the company's announcement.

This announcement came in response to Saudi Arabia's decision last week to hike its ethane and methane prices for 2016.

We remind that, as MRC wrote previously, in April 2015, Rabigh Refining & Petrochemical Co. (Petro Rabigh) received ownership of the Rabigh Phase II project from Saudi Aramco and Sumitomo Chemical, major shareholders in Petro Rabigh, and will now integrate the project into Petro Rabigh's existing refining and petrochemical complex in Rabigh, Saudi Arabia.

The Rabigh II project, expected to cost about USD 8.1-billion, involves expanding an existing ethane cracker and adding production of ethylene propylene rubber, thermoplastic polyolefins, methyl methacrylate monomer, polymethyl methacrylate, low-density polyethylene/ethylene vinyl acetate, paraxylene/benzene, cumene and phenol/acetone. Production facilities are expected to begin operations "one after another, beginning in the first half of 2016," Sumitomo said.

PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals. Thus, the complex currently has a cracker to produce 1.3-million t/y of ethylene and 900,000 t/y of propylene, as well as downstream production of polyethylene, polypropylene, propylene oxide, ethylene glycol and butene-1.