Chile’s PE production cut by 50% until late March

28 February 2012 19:54  [Source: ICIS news]

HOUSTON (ICIS)--Polyethylene (PE) production in Chile has been cut in half until late March on diminished ethylene supplies, a source with Dow Chemical said on Tuesday.  

A reduction in ethylene output at the Enap Talcahuano refinery is the root of the shortages, downstream sources said.

The Enap plant had been down a couple of weeks ago to repair a pinhole on a steam line, a procedure that flared some ethylene, making neighbours at the city of Concepcion believe the problem had been a fire. 

The plant recovered from that incident, but no details have surfaced about the reasons for the current slowdown in ethylene production. Enap has not immediately returned calls seeking comment. 

A distributor said that conditions could become stable in Chile no sooner than mid-April, when the PE plant is expected to have rebuilt inventories.  

Dow Chemical's low-density PE (LDPE) plant in Chile has a capacity of 46,000 tonnes/year. The diminished ethylene supply is expected to generate significant shortages of PE in the domestic market. 

Local distributors were already looking to secure some volumes of PE through imports, but, in the current conditions, this was not an easy task. 

Dow has problems of its own at its 120,000 tonne/year high-density PE (HDPE) plant in Bahia Blanca, Argentina, which is currently down while equipment clean up is being performed. The LDPE plant in Argentina is insufficient to cover domestic demand. 

Mexico’s Pemex, a frequent supplier of LDPE to Chile, has had production problems at the Cangrejera facility in recent weeks. As a result, Pemex halted all exports of LDPE, prioritising its domestic demand. 

Product from Asia has not been available in Chile of late, and Spain’s Repsol is another producer that has a diminished presence in Latin American PE markets. 

Product from the US Gulf remains slightly expensive for South America, but viable. Product from Brazil’s Braskem, if available, may be the best option to fill the gaps in Chile’s domestic production. 

Product from the Middle East could be another possibility for Chile, but the domestic production slowdown may already be solved by the time the material arrives.

By: George Martin
+1 713 525 2653

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