UpdateEgyptian chemicals supply disrupted as unrest continues

02 February 2011 16:51  [Source: ICIS news]

(releads and updates throughout)

By Mark Victory

LONDON (ICIS)--Civil unrest in Egypt has continued to cause heavy disruption in local petrochemical markets, as protests turned violent on Wednesday.

Clashes between pro-government and anti-government supporters escalated tensions within the country. There have been at least 125 deaths since the start of the unrest on 25 January.

The country has become increasingly factionalised following an announcement from President Hosni Mubarak on Tuesday that he would not stand for re-election in September.

The concession was not enough to quell the civil unrest which continues to demand immediate regime change, but has led to counter-protests from pro-Mubarak supporters, and the Egyptian army has urged protestors to end their demonstrations.

Stock markets remained jittery and oil prices continued to trade above $100/bbl because of the unrest, which has created political instability across northern Africa.

Reports about the operating status of seaports were ambiguous.

Local curfews prevented full operation of container terminals, which resulted in congestion and delays, the GAC Egypt shipping agency said on Wednesday in an update on port conditions. Break-bulk operations were very slow owing to a shortage of labour and a lack of diesel for shore equipment.

Silos for bulk cargo were still in operation and all oil and gas terminals were fully operational, GAC said.

But this was contradicted by Inchcape Shipping Services, which said in an internet update from Rotterdam that all ports were closed. The agency made no distinction between gas, liquid, bulk and container operations.

Outside the country, companies prepared to suspend deliveries to Egypt. SABIC, the Saudi Arabian petrochemical producer, said it would not ship polyolefins to Egyptian ports while the unrest continued.

Continuing civil unrest in Egypt has interrupted supply-chain logistics for chemical and manufacturing plants, but traffic through the Suez Canal was mostly unaffected, market sources said on Wednesday.

Communication lines were being re-established, which allowed clarification on the production situation at producer Egyptian Petrochemical Company’s (EPC) 120,000 tonne/year caustic soda plant in Alexandria, Egypt.

It was thought that EPC had been forced to shut down its plant due to civil unrest, and communications disruption in the country had made it impossible to confirm the situation.

However, a company source said on Wednesday that the plant was operating normally, but unable to deliver material because of transport blockades.

Because of the continued political instability it was unclear how long the infrastructure network would remain closed, but it was hoped the situation would improve in the next few days, the company source added.

A source at TCI Sanmar said on Monday that its 200,000 tonne/year caustic soda plant at Port Said had been closed on 29 January because riots in the local area had made it impossible to operate.

TCI Sanmar and EPC are the main caustic soda suppliers in northern Africa. Players in other northern African countries said that they were likely to import material from Asia because of the effective closure of the caustic soda market in Egypt. As a result caustic soda prices in northern Africa were expected to rise.

Sidi Kerir Petrochemicals Co (Sidpec) is continuing to run its polyethylene (PE) operations in Alexandria, despite the political unrest gripping the country, a company source said on Wednesday.

The company's PE production site - which has a nameplate capacity of 250,000 tonnes/year of high density PE (HDPE) and 225,000 tonnes/year of linear low density PE (LLDPE) - is currently being guarded by the army and workers have been forced to stay in their homes, according to the Sidpec source.

Urea producers expected that the disruption in Egyptian logistics would put upward pressure on prices, market sources said.

US spot barge methanol prices jumped at least 6 cents/gal on Tuesday following an announcement that methanol producer Methanex had halted operations at its new plant in Egypt due to the civil unrest.

Additional reporting by Franco Capaldo, James Mills, Mike Nash, Stephanie Wilson and Ross Yeo

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By: Mark Victory
+44 208 652 3214

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