Dow reduces PE output due to cracker outage

05 June 2008 17:04  [Source: ICIS news]

LONDON (ICIS news)--Dow has reduced polyethylene (PE) output at its facility in Terneuzen, the Netherlands, due to an unplanned outage at its cracker which began on Sunday, company sources confirmed on Thursday.

 

“Our 95,000 tonne/year line came down earlier in the week. We hope to start it up at the end of the week, if all goes to plan with the cracker,” said one of the sources.

 

The 575,000 tonne/year ethylene cracker had only recently restarted after a planned maintenance shutdown. Dow has subsequently declared force majeure on ethylene out of the site.

  

Linear low density polyethylene (LLDPE) was also cut back but details of the current production status were not given.

 

High density polyethylene (HDPE), which the company already planned to reduce by almost 20% in June due to the lack of profitability, would be slashed by 30% due to the lack of ethylene, sources said.

 

Dow has four LDPE lines at Terneuzen totalling 610,000 tonnes/year, one of 95,000 tonnes/year, along with three others totalling 170,000 tonnes/year each. The company’s 160,000 tonne/year HDPE unit affected by the outage is based in Tessenderlo Belgium.

 

Meanwhile, Dow was actively seeking €100/tonne ($115/tonne) increases in June for PE, followed by another €50/tonne hike in July.

 

Buyers confirmed Dow was indeed targeting such increases but that other producers were looking for less.

 

Dow Europe had also shut down its 75,000 tonne/year LDPE line in Tarragona, Spain, for one week for “economic and commercial reasons” at the end of May.

 

There were widespread expectations of higher prices in June, and at this point in the month, it looked as if buyers would not get away with anything less than €50/tonne in June.

 

Producers complained that to sell PE at former prices was not sustainable, as margins were low.

 

“When ethylene goes up again in quarter three, our margins will be negative if prices do not move up significantly,” said another PE producer.

 

Bi-monthly ethylene was settled last week at an increase of €75/tonne to €1,105/tonne FD (free delivered) NWE (northwest Europe). This had led to strong expectations for an increase in third-quarter ethylene.

 

LDPE prices were typically settling in the high €1,300s-1,400/tonne FD NWE, on a gross basis, according to one major producer.

 

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

 

($1 = €0.65)

 

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By: Linda Naylor
+44 20 8652 3214

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