Shell halts IPA production at Pernis due to mechanical problem

11 February 2011 12:15  [Source: ICIS news]

LONDON (ICIS)--Shell has stopped production at its 150,000 tonne/year isopropanol (IPA) plant at Pernis in the Netherlands due to a mechanical problem, a company source said on Friday.

The plant was shut down at the close of the week ending on 4 February, and was expected to restart no earlier than 15 February, the source added.

The company was expecting to meet its agreements but reserved the right to enter force majeure (FM) if the situation is not resolved as expected, the Shell source said.

“We are taking all reasonable efforts. We expect to fulfil agreements but reserve the right to enter FM,” the source added.

The unplanned outage would also affect Shell’s ability to build stocks ahead of a scheduled maintenance from 28 March to 20 April, the source said.

The company was expecting to fulfil its agreements during the maintenance period, the source added.

The European IPA market was already tight prior to Shell’s production outage. This was because of a reduction in imports from the US because propylene hikes in that region had made material uncompetitive. Further shortening availability, tight supply in the upstream propylene market was making it more difficult to secure feedstock.

At the same time, demand was strengthening because of restocking and warmer weather stimulating activity in the downstream construction market.

The Shell outage, coupled with rising propylene costs and pre-existing IPA tightness, was placing upwards pressure on prices.

As a result, some European IPA producers and traders saw price increases of €120-140/tonne ($162-189/tonne) from last week, which they said would take technical-grade values to €1,120-1,200/tonne FD (free delivered) NWE (northwest Europe).

($1 = €0.74)

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By: Mark Victory
+44 208 652 3214



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