NewsFlashDow shuts Tarragona LDPE on margins

28 May 2008 12:14  [Source: ICIS news]

LONDON (ICIS news)--Dow Europe has shut down its 75,000 tonne/year low density polyethylene (LDPE) line in Tarragona, Spain, for one week for “economic and commercial reasons,” a company source said on Wednesday.

 

“There is not a lot of sense to process more than is absolutely needed. If it means we lose volume, then so be it. We will fight for higher prices,” the source added.

 

“At the moment we expect to be back next week.”

 

Dow announced a €150/tonne ($234/tonne) increase on all polyethylene (PE) grades last week for June monthly business. SABIC later announced a €80/tonne increase for June on LDPE and linear low density PE (LLDPE).

 

Buyers were still sceptical when confronted with increases of such magnitude, but they were also aware of upstream increases.

 

Several acknowledged that they would probably not be able to buy at a rollover from May next month, given such high oil and naphtha prices.

 

Naphtha was down to $1,017-1,021/tonne CIF (cost and freight) NWE (northwest Europe) on Wednesday, in line with lower crude, but a record high of $1,048/tonne CIF NWE was traded on Tuesday.

 

Crude was now down from its high above $135/bbl, below $130/bbl.

 

There had been much talk of possible production cutbacks at the cracker and polymer level, but it was only when oil hit $135/tonne and naphtha soared above $1,000/tonne CIF NWE that margins became severely challenged.

 

LDPE gross monthly prices were not yet fully settled in May, and prices were so far reported just below €1,300/tonne FD (free delivered) NWE.

 

Dow had already said it would cut back high density PE (HDPE) in June by 20% due to high production costs.

 

PE producers in Europe include Saudi Basic Industries Corp (SABIC), LyondellBasell, Borealis, Total Petrochemicals, Polimeri Europa, INEOS Polyolefins, Dow and Repsol.

 

($1 = €0.64)

 

For more on PE visit ICIS chemical intelligence
Click here to find out more on the European polyethylene margin report
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By: Linda Naylor
+44 20 8652 3214

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