INEOS declares force majeure on Cologne LDPE

01 July 2010 16:59  [Source: ICIS news]

LONDON (ICIS news)--Major low density polyethylene (LDPE) producer INEOS has declared force majeure on production from its Cologne site in Germany following a technical issue, a company source said on Thursday.

One of INEOS’s two 200,000 tonne/year LDPE lines at the facility had suffered undisclosed technical problems towards the end of last week, but it was unclear whether the second line, which had been unaffected according to previous reports, was still running.

“We have announced force majeure on LDPE and do not expect the facility to come back [on stream] before mid-July,” the company source said. “LDPE is incredibly tight and we do not see any [downward] price correction for a long time.” 

The extreme shortness of LDPE had characterised the market for the past few months, with prices rising by more than 30% in 2010 as a result of numerous ongoing production constraints and 2009's permanent closures.

As such, many producers remained confident that they would be able to achieve their targeted increases of €30-50/tonne ($37-61/tonne) in July, with successes at €20-30/tonne already reported, but not confirmed on the buy side. 

June LDPE domestic prices were agreed at €1,385-1,400/tonne FD (free delivered) NWE (northwest Europe). 

Several buyers expressed frustration that LDPE prices continued to surge, despite the downward trend in the upstream ethylene market. 

One buyer said: “It is a very strange scenario in the PE market. If you want the material, you have to be prepared to pay higher prices because of tight availability; the producers are making hay while the sun shines.”

($1 = €0.82)

For more on INEOS’s Cologne plant, visit ICIS plants and projects
For more on LDPE, visit ICIS chemical intelligence
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By: Stephanie Wilson
+44 20 8652 3214

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