03 February 2011 16:48 [Source: ICIS news]
By Mark Victory
LONDON (ICIS)--Political unrest in Egypt continued to disrupt chemical markets on Thursday, pushing oil prices further up as violence escalated.
Crude oil hit as high as $103/bbl on Thursday over concerns that heightened tensions could disrupt oil supply and there were continued fears over the security of the Suez Canal, although there has been no disruption so far.
A butadiene trader said that players were avoiding shipments to Asia, preferring instead to ship to the US – where prices are higher – because of concerns over transporting on the Suez Canal.
“Asia is not possible anymore, should anybody still want to entertain that idea, as nobody wants to still commit passing Suez,” the trader said.
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Players in other markets said that they were following the situation closely, as the shipping route around South Africa takes much longer.
“Everyone is chasing the status of the Suez (canal)," a global caustic soda buyer said.
Egypt's prime minister, Ahmed Shafiq, said in a state TV announcement on Thursday that the Suez Canal would not be threatened.
North African caustic soda prices rose as players looked to source alternative material because of the effective shuttering of the market in Egypt, sources said.
Coupled with tight European supply, the Lunar New Year meant that volumes in Asia were also tight, and shipping times of around six weeks meant north African players were turning to other African regions to cover volumes.
Countries such as South Africa were reporting an increase in demand due to the crisis in Egypt.
There were also suggestions that traditional liquid buyers were switching to solid material to lower transportation costs. Prices were varying, with players able to charge a premium to guarantee material.
TCI Sanmar’s 200,000 tonne/year caustic soda plant at South Port Said, was still shut on Thursday, a company source said. It closed the plant on 29 January after riots in the local area made it impossible to operate.
With political unrest inside the country escalating and becoming more violent, it was expected that the restart process would not begin until at least Sunday.
EPC’s 120,000 tonne/year plant in Alexandria is operational, but unable to deliver because of transportation blockades, a company source said.
“Everything is on hold. It’s a crisis now. Everything is being controlled by the army,” the source said.
Information about Egypt's port status was still unclear but most shipping operations seemed largely unaffected.
Violent protests have continued throughout the day in Cairo and Alexandria, with continuous reports of gunfire and escalating tensions.
UN Secretary General Ban Ki-moon, in a briefing to journalists in London, in part blamed “the skyrocketing price of commodities,” for the current unrest, according to the Guardian newspaper's live blog.
There were also reports of foreign journalists being removed by the police, an act which brought condemnation from global leaders. Political pressure has been mounting on Egypt to implement reform.
Additional reporting by Franco Capaldo, Sarah Trinder and Nel Weddle
($1 = €0.72)
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