Venezuela’s polymer production remains under par - buyers

09 December 2011 17:38  [Source: ICIS news]

The flag of VenezuelaHOUSTON (ICIS)--Production of polymers in Venezuela has not achieved consistency after a number of turnarounds this year, leaving shortages of some grades, buyers said on Friday.

The country's only polypropylene (PP) plant increased capacity at the end of 2010 from 110,000 tonnes/year to 144,000 tonnes/year - a 34,000 tonne/year expansion.

However, the plant has not been able to deliver the targeted 12,000 tonnes/month consistently in 2011, and production has remained around 8,000 tonnes/month, which is less than what the plant produced before the expansion, buyers said.

Market players expected PP production to improve in December, although not by much. PP resins are currently in short supply, buyers said.

The shortages generated by the lower production have been covered with imports, increasing domestic prices.

Things have not been better for polyethylene (PE) production. Linear low density PE (LLDPE) is the grade that has typically been in short supply, produced at Venezuela’s 190,000 tonnes/year swing plant (HDPE/LLDPE).

Shortages of low density PE (LDPE) have been added to the list more recently, because of technical problems.

Buyers try to cope with these shortages ordering more material than they really need. They know that the state-owned producer will deliver less than requested.

Conversely, the local producer knows that buyers ask for more product than they need, which minimises the claims about shortages.

The danger of delivering too much product is that part of those volumes could be smuggled out of the country to neighbouring Colombia, where prices are much higher.

This has been a lingering problem in Venezuela, encountered also in the subsidised fuels segment. Gasoline in Venezuela is cheaper than water.

Polystyrene (PS) production faces different problems. Although the privately-owned Estizulia plant has been in good operating condition, shortages of raw materials (supplied by state-owned Pequiven) have caused diminished production and scarcity at times.

Delayed arrival of shipments of styrene monomer (SM) and/or butadiene rubber (BR), essential feedstock for the production of high impact PS (HIPS), have caused the PS plant to stop or work at diminished capacity, impairing overall production.

This has been a sensitive material shortage because it affects the food segment. Disposable packing materials for food are largely made of PS.

The state-owned producer did not immediately return calls about the status of the production plants.

For more on petrochemicals visit ICIS chemical intelligence

By: George Martin
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