SABIC reduces PE output in Europe on poor demand

11 September 2008 15:51  [Source: ICIS news]

LONDON (ICIS news)--Saudi Basic Industries Corp (SABIC) is reducing polyethylene (PE) output in Europe due to poor demand, a company source said on Thursday.

 

“We are cutting back across the board. At the cracker and across all PE grades,” the source said. “In some cases we are running as low as 85%.”

 

SABIC already had lower than usual volumes of linear low density PE (LLDPE) available for sale as imports from Saudi Arabia into Europe had been reduced for several weeks.

 

PE demand in August was very poor, and while September volumes have been better, they were lower than most producers had expected.

 

Converters were buying minimum volumes, expecting prices to decrease further when the fourth-quarter ethylene price was settled.

 

Most monomer buyers were working on a reduction of up to €120/tonne ($169/tonne) from the third-quarter ethylene contract level of €1,228/tonne FD (free delivered) NWE (northwest Europe). Sellers did not expect such a drop.

 

SABIC producers 590,000 tonnes/year of LDPE and 320,000 tonnes/year of high density PE (HDPE) at its site in Geleen, the Netherlands, and makes 370,000 tonnes/year of LLDPE and 165,000 tonnes/year of HDPE at its facilities in Gelsenkirchen, Germany.

 

The company also constructing a new 400,000 tonne/year LDPE plant in Wilton, UK.

 

Market sources expected material to be available in early 2009 but there was no confirmation of this at source.

 

PE prices were under downward pressure in September and buyers were pushing for decreases of up to €100/tonne.

 

Sellers said that they were unlikely to achieve such a big drop, particularly as producers were still working on the high third-quarter ethylene contract price of €1,228/tonne FD NWE but prices were already sliding.

 

“We have cut our high-priced August accounts by €50/tonne,” said one major PE producer, emphasising that its August prices had been at the top end of the price range.

 

LDPE spot prices were now below €1,400/tonne FD NWE, from their high of €1,500/tonne FD NWE in July.

 

Other major PE suppliers in Europe include LyondellBasell, Borealis, Polimeri Europa, Dow, Repsol, Total Petrochemicals and INEOS Polyolefins.

 

($1 = €0.71)

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By: Linda Naylor
+44 20 8652 3214

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