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Nouryon cuts production in China as coronavirus dampens demand

February 26/2020

MOSCOW (MRC) -- All Nouryon's (Amsterdam, Netherlands formerly known as AkzoNobel Specialty Chemicals) production plants in China except one are back in operation following the extended Lunar New Year holiday, but the facilities are running well below capacity because of the impact of the coronavirus outbreak, reported Chemweek with reference to Nouryon CEO Charlie Shaver's statement.

Speaking to CW on Wednesday, Shaver said the company's biggest plants in the country, including its Ningbo facility, are operating at 3050% of capacity. This is in response to a fall demand in China for the company's products, which is currently at 3050% of normal levels, he says.

Nouryon's China operations generate about EUR700 million (USD756 million) of the company's approximately EUR5 billion/year in sales. "Most of the products we make in China are sold in China," Shaver says.

Shaver expects the "demand constraints" to continue through March and April. "We may see some rolling effect for a few months," he says. "Supply chains are limiting our operations because we have customers in China whose plants are still down (after the holiday)." Nouryon customers that export from other countries to China are also impacted, Shaver says. Demand for the company's bleaching chemicals has weakened because pulp demand is falling with lower production in China of consumer products such as white goods.

Nouryon, meanwhile, is receiving offers of raw-material products elsewhere in the world from companies that would normally ship those items to China. "There's some downward pressure on pricing of raw materials across the board," Shaver says. "We have noticed in the last week or two that people are offering us products for sale. Some suppliers are offering us lower prices." He sees this as a "temporary dislocation," however. Shaver expects a "hit" from the coronavirus to the company's first-quarter results, but "no material impact" to its full-year earnings.

Nouryon's organic peroxides plant at Tianjin is the faciity that has not restarted. The company is relocating its Tianjin organic peroxides production to a new plant in an industrial park in a EUR90-million project. These plans have been delayed by several months because of the late return of construction workers to the site due to government restrictions, Shaver says. The new plant had originally been due to start up in the second quarter of 2020  with a capacity expansion of 3070%. The company has not adjusted its overall capital expenditure plans, however, he says.

Nouryon makes organic peroxides at Ningbo as well as Tianjin. The company's other Chinese production sites are at Boxing; Guangzhou; Jiaxing; Songjiang, near Shanghai; Suzhou; and Taixing.

As MRC wrote previously, in February 2019, Nouryon (formerly AkzoNobel Specialty Chemicals) announced that it  would license its innovative continuous initiator dosing (CiD) technology to Karpatnaftochim, Ukraines largest polyvinyl chloride (PVC) producer. Nouryons patented CiD technology allows PVC producers to increase reactor output by up to 40 percent, improve product quality, and make the production process intrinsically safer - all with minimum capital expenditure.

Karpatneftekhim is one of the largest enterprises of Ukraine's petrochemical complex. Currently, the plant can produce annually 300,000 tonnes of PVC, 200,000 tonnes of caustic soda, about 180,000 tonnes of chlorine, as well as 250,000 tonnes of ethylene and 100,000 tonnes of polyethylene.

According to ICIS-MRC Price report, Karpatneftekhim increased capacity utilisation in December, total PVC production had increased to 23,550 tonnes against 21,700 tonnes in November. Overall PVC production in the country was 240,400 tonnes in January-December 2019, up by 15% year on year.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.
Author:Margaret Volkova
Tags:PVC, SPVC, petrochemistry, Akzo Nobel Functional Chemicals BV, Nouryon, Karpatneftekhim, China, Netherlands, Ukraine.
Category:General News
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