China's Largest Ethylene Factory Stops Production after Lightning Strike

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Researched by Industrial Info Resources (Sugar Land, Texas)--Production came to a halt at Sinopec's (NYSE:SNP) (Beijing) Maoming Petrochemical Factory in Maoming City, Guangdong province, after lightning struck ethylene-cracking equipment and a cracking furnace during inclement weather. The equipment immediately caught fire, which more than 20 fire trucks worked to extinguish despite a continuing downpour.

The damaged pieces of equipment are key devices in ethylene production at the plant, which produces about 10% of China's ethylene products every year. Equipment damage is being evaluated in order to estimate a restart date.

The Maoming plant recently cut ethylene production to focus on oil products. The halt is expected to lead to tighter supply and to dealers taking advantage of the opportunity to adjust ethylene prices accordingly. The quake-hit Sichuan province is still in need of tents for people who have been displaced, and these tents require polyethylene and polypropylene. Experts say that if production at the Maoming plant does not resume in the next few months, prices of polyethylene and polypropylene could rise.

The Maoming plant, completed in 1996 and expanded in 2006, housed the first set of large-capacity ethylene equipment in the southern and southeastern regions in China. The factory produces more than 1 million tons of ethylene and 1 million tons of synthetic resin every year. Its ethylene capacity is about one-sixth of Sinopec's total.

Heavy rains are not hitting southern China, the same area hit by major snowstorms earlier this year. If heavy rains lead to flooding, industrial losses in the area may be considerable. Exactly a decade ago, an unprecedented flood struck the area, causing severe damage to the area.

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