Saudi Ethylene halts HDPE production at Al-Jubail plant

27 April 2010 12:57  [Source: ICIS news]

(Adds 12th paragraph about stakeholders in the Saudi Ethylene venture.)

LONDON (ICIS news)--Saudi Ethylene and Polyethylene Co has halted operations at its high density polyethylene (HDPE) site at Al-Jubail, Saudi Arabia, following a technical issue, a source with knowledge of the company's production said on Tuesday.

“The HDPE site is down on a technical issue and that has resulted in low availability,” said the source. “It will hopefully be resolved within the next month, but the constraints on [upstream] monomer supply will mean things are still tight.”

It was unclear when the technical issue occurred, the source added.  

The site has a nameplate capacity of 400,000 tonnes/year of HDPE, according to the ICIS plants and projects database.

The news came as market players in Africa also lamented the short supply of polypropylene (PP) from the region due to ongoing planned maintenance at Al-Waha Petrochemical Co’s 450,000 tonne/year facility at Al-Jubail.

The PP site was expected to restart on 29 April following the two week outage, and a source said that everything was running according to schedule.

However, the tighter availability, combined with improving demand, could result in further increases in African polymer prices in May, several producers said.

Hikes of $30/tonne (€23/tonne) on certain grades of PP could be possible, while polyethylene (PE) prices could rise by as much as $50/tonne, depending on the grade and region in which the buyer is based, one seller said.

Several consumers across Africa said they felt that such increases would result in further hesitation among buyers and a hand-to-mouth purchasing policy.

One western Africa-based buyer said: “We would be out-priced at higher levels.”

However, there was growing concern in the market that the current surge in prices was not sustainable, as it was production constraints, rather than any significant improvement in demand, that was driving the upward trend.

Many sellers have now acknowleded the possibility that prices could soften in late June/early July as a number of production facilities were due back on stream, while new capacities in Asia and the Middle East were expected to begin exporting material into the wider polymers market.

Saudi Ethylene is a joint venture of Sahara Olefins Co, which holds a 24.4% stake; National Industrialisation Co (Tasnee), with a 50.6% stake; and LyondellBasell, which holds the remaining 25%.

($1 = €0.75)

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By: Stephanie Wilson
+44 20 8652 3214

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