South Korea's S-Oil restarts PX unit at low run rates

South Korean producer S-Oil restarted its 1mn t/yr paraxylene (PX) unit in Onsan on 1 August and is running at low rates of 20pc, according to a source close to operations.

This came after the PX unit was shut on 28 July, because a fire had broken out at an isomerisation unit's heater unit.

The PX unit managed to restart after obtaining approval from authorities, despite market participants initially expecting a longer closure because of investigations and the need to pass safety assessments.

But S-Oil's isomerisation unit remained closed because of severe damage at the heating facility, so the producer will have to bypass the isomerisation process to produce PX. This means that PX yields would be heavily compromised, with the unit now forced to operate at just 20pc, which translates to 200,000 t/yr of production. The unit previously operated at 80pc before the fire broke out.

The firm expects its PX unit to remain at current low run rates, until the isomerisation unit's heating facility is replaced. The replacement is expected to take several months as the technical parts need to be imported.

S-Oil have reached out to term contract offtakers in the domestic and export markets toreduce their monthly allocated PX volumes. The company received amicable agreements from all affected parties, said a source close to the firm. Some domestic PX buyers are considering reducing their PTA operating rates to manage the supply losses, said a South Korean PTA producer.

South Korean domestic PTA producers are unlikely to urgently seek spot cargoes to fill shortages, as the economics to produce PTA are currently below breakeven point. Average PTA-PX margins stood at $88/t and $87/t respectively for June and July. The industry-acknowledged breakeven point is at $90-100/t, said a South Korean PTA producer.

By Alicia Goh