LyondellBasell declares FM on US olefins - customers

09 February 2010 18:31  [Source: ICIS news]

Lyondell Corpus Christi siteHOUSTON (ICIS news)--LyondellBasell declared a force majeure (FM) on US olefins, market sources said on Tuesday, citing supply restrictions.

Market participants attributed the supply restrictions to a possible delay in the restart of the company’s Corpus Christi cracker in Texas.

However, a LyondellBasell official said the restart at Corpus Christi remained on schedule.

“We had indicated when we began the turnaround that it would return to service in February, and it is still scheduled for February,” said company spokesman David Harpole.

The cracker was taken off line in mid December for a major turnaround that will allow the 771,000 tonne/year unit to run mostly on lighter feedstocks once maintenance is completed.

LyondellBasell began to restart the unit on 25 January, according to a filing with the Texas Commission on Environmental Quality (TCEQ).

The filing scheduled completion of the start-up process for mid-February, but the company filed on 4 February a second notice with the TCEQ reporting a leak on a propylene refrigerant compressor at the same site.

While LyondellBasell did not specifically say the leak disrupted the start-up process, news that the company was declaring FM on ethylene and propylene has fueled speculation that the restart will take longer than originally planned.

“I heard talk that it might be delayed but there is nothing confirmable,” a market participant said. “It has to be something or else why declare FM,” the same source said.

Details on allocation levels for propylene and were not immediately available, but one market participant said the company has set allocation on ethylene at 87% for February.

Lyondell has also declared a force majeure on Gulf coast PE, customers said.

The company would not comment on the FM declarations, citing policy.

LyondellBasell is the second US producer to announce a restriction on ethylene supply in recent days.

INEOS last week announced FM on the monomer due to mechanical problems at its Chocolate Bayou complex in Texas, market sources said.

The company provided no details on allocation levels in a letter sent to customers.

An INEOS spokesperson declined to comment, citing company policy.

INEOS has two crackers in Chocolate Bayou with combined ethylene capacity of around 1.8m tonnes/year.

US ethylene spot prices were steady on Tuesday amid a lack of fresh market activity.

Ethylene for February was offered at 55.00 cents/lb ($1,213/tonne or €885/tonne) with no bids.

Ethylene for February last traded on 2 February at 51.75 cents/lb. That compares with February deals done at 49.50-52.00 cents/lb in the previous week.

(Additional reporting by David Barry)

($1 = €0.73)

For more on ethylene, visit ICIS chemical intelligence
For more on LyondellBasell’s plants, visit ICIS plants and projects
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