France rail strike could lead to cracker, derivative cutbacks

13 April 2010 14:15  [Source: ICIS news]

Commuter waits for train at Paris train station, Gare du NordLONDON (ICIS news)--An ongoing rail strike in France could lead to cutbacks for certain kinds of cracker and derivative production in the region if the industrial action is extended, as storage is nearing maximum capacity, sources said on Tuesday.

“It will have an impact sooner or later. At the moment, we’re surviving. If it lasts another week or so, there will be problems,” said one downstream acrylates manufacturer.

This view was also echoed by a feedstock supplier, who said it had been impossible to move product feedstocks via rail in France since 7 April, when the strike began, and this was penalising the Feyzin cracker, a joint venture between Solvay and Total.

Solvay confirmed this but Total declined to comment about logistics. The Solvay source added: “If the strike continues, we will have issues, we will reach the limits regarding storage and then we will have to reduce [cracker] production.”

A derivative player, which is supplied by the Feyzin cracker, said: “Propylene is just sitting on the railcars in Feyzin. Our biggest concern is buying it on the spot market for a massive premium.

"Hopefully this will not last much longer, or we will have to reduce [derivative] production. This is bad timing for the epichlorohydrin [ECH] market as it is already tight.”

Another derivative manufacturer also expressed concerns about getting supply of feedstock 2-ethylhexanol (2EH) to make dioctyl phthalate (DOP). Currently, the DOP market is incredibly tight, prices are high and most producers are on allocation, so any disruptions would be problematic.

Other feedstock and downstream suppliers, however, said they were not affected by the rail strike, as they used, or had sourced, alternative means of transport such as pipeline, barge, ship or truck, depending on location and agreement.

“You could be lucky or unlucky, depending on where you are located and where you get the material from,” said one derivatives supplier.

The southern and southeastern parts of France were seen to be more affected by the logistical disruption than the northern part of the country, according to market players.

The strike by France's SNCF train drivers and conductors was driven by the need to push for better pay and improved working conditions. It was due to last one week but unions have suggested it could go on for longer.

Additional reporting by Amandeep Parmar, Libby George and Mark Victory

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By: Heidi Finch
+44 20 8652 3214



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