INEOS makes heavy PE cutbacks in Europe on weak demand

02 November 2011 12:01  [Source: ICIS news]

INEOS cuts Europe PE productionLONDON (ICIS)--Major polyethylene (PE) producer INEOS is making hefty cutbacks on PE production in Europe for the remainder of 2011, company sources said on Wednesday.

“We will be running all low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) assets at minimum rates,” said one source, estimating the average run rate of both PE grades at 50% of capacity.

Another INEOS company source, referring to the high density polyethylene (HDPE) sector where film grade demand has declined, said: “We will be cutting production to meet the reality of demand.”

Non-film HDPE grades, however, have not seen the drop in demand witnessed in the LDPE and LLDPE sectors.

“HDPE demand [non-film] is not worse than it was,” said the source.

Switzerland-headquartered INEOS has HDPE production in Europe amounting to around 1m tonnes, or 15-18% of installed capacity, with sites in Belgium, France and Italy.

Its LDPE production is in Norway and Germany, and its LLDPE production is in the UK and Germany.

PE demand is well down on 2010, with some sources estimating volumes to be down well into double digits, and production throughout Europe is now being cut on a widespread basis.

Dow announced that it was making hefty cutbacks in PE for the rest of 2011, and Borealis is running crackers at a technical minimum to accommodate weak demand.

“At some point in January or February we will see a turnaround,” said one of the INEOS sources.

“Nobody wants stock at the end of the year, and buyers will have to come back to the market in 2012 to buy. Crackers and PE plants are sensitive, and there will be some shortages and higher prices when this happens. I’m not predicting big increases, but our margins have to return to more workable levels.”

PE demand has been affected by gloomy financial news around the globe, particularly in Europe, and many converters are running at reduced rates.

PE is used in packaging and agricultural sectors.

For more on polyethylene visit ICIS chemical intelligence

By: Linda Naylor
+44 20 8652 3214

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