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Asian caprolactam plants cut operation rates on shrinking demand
06
Oct '08
The economic crisis in the US seems to be having an effect on the value chain across the whole global textile spectrum. The most to be affected are the key raw material providers to the industry; petrochemical companies in Asia.

Several ethylene, naphtha and other feedstock manufacturing companies have been hit hard by the crisis and the only way out for these companies seems to be cutting down on their operating rates in face of rising inventory levels due to poor demand from down stream industries.

The plants have reduced their production rates by as much as 30 percent. Prices are also following a downtrend due to which buyers of these feed stock are adopting a wait and watch attitude in anticipation of further drop in prices and in turn contributing to rising stock levels at petrochemical plants.

Fibre2fashion spoke to a few of these companies to get a better understanding of the situation. A source from Japan's Sumitomo Chemical which is under anti-dumping investigations and which operates two caprolactam lines at the plant with a production capacity of 180,000 mt/year said “the caprolactam plant in Niihama and Ehime prefecture is closed until late November.”

Mr Nango from Ube Industries, Japan said “The caprolactam unit in Ube, Yamaguchi is already under regular scheduled maintenance since late September and that there is no scheduled maintenance for its 110,000 mt/year unit in Rayong, Thailand.”

He added by saying that “Price fluctuation is not the main reason for the turnaround and that caprolactam was commanding a good price in the markets.” But industry sources mention that output has indeed been lowered at the Thai plant.

South Korea's Capro Corporation was one more among the growing list of petrochemical plants in Asia which has announced a cut-down in production capacities. Last week, the company decided to cut output by 30 percent.

The Ulsan plant of Capro which has three lines has a capacity to manufacture 270,000 mt/year of caprolactam. The main reason according to an official is the below production cost prices prevailing in the Chinese markets.


Fibre2fashion News Desk - India

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