Pemex plant restart could ease Mexican VCM shortage - source

23 July 2009 21:28  [Source: ICIS news]

HOUSTON (ICIS news)--The restart of Petroleos Mexicanos’ (Pemex) Pajaritos petrochemical complex in Veracruz, Mexico, will likely ease supply tightness in the vinyl chloride monomer (VCM) market in Mexico, a source familiar with the shutdown said on Thursday.

The 400,000 tonne/year VCM plant at the Pajaritos complex near the Gulf port city of Coatzacoalcos was shut down for annual maintenance in mid May.

“Supply is still insufficient, but the Pemex [VCM] production should help ease the tight situation,” a market player said.

The shutdown compounded Mexico’s shortage of VCM because tight chlorine supply in the US had limited exports of the feedstock to Mexico.

The Pemex shutdown caused Mexichem, a Mexican polyvinyl chloride (PVC) producer, to declare force majeure (FM) in May because it was only receiving 50% of its VCM orders from Mexican and US producers. Thus, it was only able to run its PVC plants at half-capacity.

For the first time in a month, US VCM spot values halted their upward movement and were steady during the week, buyers and traders said.

US VCM spot prices were at $600-645/tonne (€420-452/tonne) FOB (free on board) US Gulf, according to data from global chemical market intelligence service ICIS pricing.

Since mid-April, VCM spot prices have risen due to increasing values in the downstream PVC market and supply tightness in feedstock chlorine.

A co-product of caustic soda is chlorine, a key feedstock in the production of ethylene dichloride (EDC) and subsequently VCM.

Caustic soda spot values in the US Gulf have declined steadily since early February. As the US caustic soda market quickly approached unprofitable price levels, producers reduced chlor-alkali production rates, sources said.

VCM is a key feedstock used in polyvinyl chloride (PVC) production.

VCM producers include Formosa Plastics, Georgia Gulf, Occidental Chemical (OxyChem), PPG Industries, Dow, Westlake and Petroleos Mexicanos (Pemex).

($1 = €0.70)

For more on VCM visit ICIS chemical intelligence
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By: Leela Landress
+1 713 525 2653

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