By Shinhye Kang
Dec. 9 (Bloomberg) -- Yeochun NCC Co., South Korea's largest ethylene producer, restarted its smallest plant today after a 20- day shutdown reduced inventories of the raw material used to make plastics and chemical products, a company official said.
The plant, known as the No. 3 cracker, resumed operations at 10 a.m. local time after closing on Nov. 19, said the official, who asked not to be named because of company rules. The plant can make 400,000 metric tons of ethylene from naphtha a year.
South Korean petrochemical operators including Yeochun and Honam Petrochemical Corp. had lowered output after the global economic downturn cut ethylene demand and prices. The ethylene margin, or profit, in Asia has recovered some ground because of tighter supply after aggressive output cuts, Macquarie Group said in a report today.
Macquarie is still ``cautious'' on the margin outlook for next year as demand is expected to be weak and new plants become operational in the first quarter, said Christina Lee, an analyst at the bank. ``We are concerned that companies are reacting fast to the margin recovery by increasing their utilization rates.''
Yeochun plans to gradually increase the plant's operation rate to 85 percent, the official said. The ethylene maker's two bigger plants, capable of producing 857,000 tons and 555,000 tons of ethylene annually, are operating at full capacity, he said.
Seoul-based Yeochun plans keep the 400,000 ton-a-year cracker running because a drop in prices of naphtha, a refined oil product used to make ethylene, has helped improve margins, the official said.
Naphtha prices for cargoes loading in Singapore, Asia's biggest oil-trading center, have slumped 80 percent from a record $135.45 a barrel on July 4.
To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.
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