INEOS Grangemouth LLDPE goes down amid tight market

07 January 2010 10:40  [Source: ICIS news]

INEOS Grangemouth siteLONDON (ICIS news)--Major polymer producer INEOS’ 320,000 tonne/year linear low density polyethylene (LLDPE) unit at Grangemouth in the UK is out of action due to problems caused by cold weather conditions, a company source said on Thursday.

“We lost production some time between Christmas and the New Year, and have had to open up the reactor because of an agglomeration problem,” said the source.

The plant at Grangemouth is a swing plant that produces C6 LLDPE grades alongside high density PE (HDPE). The plant was running an LLDPE campaign at the time of the problem, said the source.

“We want to run and are putting all the assets we can behind the problem,” added the source, all the while admitting that the situation was not easy.

INEOS was looking for a €100/tonne ($145/tonne) increase for January PE, citing €1,050/tonne as a minimum for low density PE (LDPE).

“We are running LDPE flat out as that’s where we perceive the main tightness of the market to be,” said the source.

There were mixed reports from the PE market as buyers came back from holidays, all unconvinced that PE availability was as tight as producers reported.

Naphtha has gone up since December and crackers are not making money. Customers have destocked and there is limited supply,” said the producer in support of price increases.

Asian demand and production issues in the Middle East were also said to be supporting producers’ aims to increase prices in Europe.

Buyers’ reaction to the proposed increases was cautious.

“They have told me they want increases for January but I haven’t settled anything yet,” said one large buyer. PE discussions for January pricing would begin in earnest later in the month, but spot prices had seen some upward movement since the end of 2009.

LDPE spot prices were reported in a very wide range this week as buying sources who had not covered themselves for January came back to the market, but volumes were still low.

“I have managed to sell a couple of trucks at above €1,000/tonne this week,” said a distributor.

The situation over January pricing was expected to become clearer next week when buying sources would be back in the market after holidays.

($1 = €0.69)

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