SABIC to cut PE into Europe on Al-Jubail outage

30 July 2008 12:34  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS news)--SABIC will import less polyethylene (PE) into Europe in August and possibly beyond after two PE lines with a capacity of 725,000 tonnes/year and a cracker were shut down in Al-Jubail, Saudi Arabia, a company source said on Thursday.

“We will have restricted replenishments in August and probably September,” the source said, adding he could not comment on how much imports would be reduced by but said that the reduction would be “substantial”.

SABIC was reported to have shut down two PE lines and one of its crackers at Al-Jubail.

Eastern Petrochemical Co (Sharq), a joint venture of SABIC and Japan’s SPDC, operates the 375,000 tonne/year linear low density PE (LLDPE) line while SABIC subsidiary Arabian Petrochemical Co (Petrokemya) runs the 350,000 tonne/year high density PE/LLDPE line run by.

The PE shutdowns were due to a shortage of ethylene caused by technical problems at SABIC’s 650,000 tonne/year Petrokemya cracker, also at Al-Jubail, a source close to the company said.

The closures came at a time when European PE buyers were faced with yet more hikes, after paying record increases in July.

July PE rose by as much as €200/tonne ($313/tonne), and producers intended to maintain the upward pressure into August, announcing increases of €50-150/tonne.

PE buyers were expecting to be paying more for August.

“Product is tight, we will have no choice,” said a large PE buyer.

One trader voiced a note or caution. “One problem for us is that credit limits are being really stretched. One truckload of PE now costs nearly €40,000. It is a problem for the whole industry,” he said.

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

($1 = €0.64)

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By: Linda Naylor
+44 20 8652 3214

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