Logistics problems pile up for US PE exporters

25 April 2008 17:21  [Source: ICIS news]

HOUSTON (ICIS news)--A shortage of outgoing cargo space and shipping containers is causing bagged polyethylene (PE) resin to stack up at Houston ports, a trader said on Friday.

“We are seeing absolutely no improvement. It may have gotten a little worse,” the source said. “We could sell more product if we could only move it,” he added.

A PE producer presented a similar assessment: “Each month it gets a little harder to do things.”

Six months ago, exporters could call to book outgoing cargo space within two weeks, the producer said.

“Now it’s June before you can get on a ship,” he said.

Tight logistics at the ports are the by-product of a weak dollar, which has caused US export volumes to grow across a variety of commodities.

PE exporters said material is beginning to leave via alternate ports on the US east and west coasts, because ships out of Houston are already full.

Major PE movers say they have been able to manage through the tight shipping situation so far by booking logistics well in advance.

Still, the prospect of a worsening export bottleneck is concerning to PE producers, who have leaned heavily on exports to clear out inventory and support prices amid weak US resin market conditions.

Market participants said 20-30% of US PE production was being exported.

Major PE producers include Dow, NOVA, Westlake Chemical, and Chevron Phillips.

($1 = €0.64)

For more on polyethylene visit ICIS chemical intelligence

By: David Barry
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