FocusGulf May PP supply stays tight on low production in April

27 April 2012 05:28  [Source: ICIS news]

By Ong Sheau Ling

SINGAPORE (ICIS)--Spot polypropylene (PP) supply from the Gulf Cooperation Council (GCC) remains short for May shipments, as polymer facilities in the region ran at reduced capacity for most of April, industry sources said on Friday.

Operating rates at GCC PP plants averaged about 80% this month, they said.

Persistent tight supply have kept PP prices in the Middle East well supported at high levels in April, in spite of weak downstream demand, market sources said.

From the start of the year, PP raffia prices have increased by 18-19% to $1,540-1,570/tonne CFR (cost and freight) GCC, and $1,530-1,560/tonne (€1,163-1,186/tonne) CFR (cost and freight) East Med (East Mediterranean) on 20 April, according to ICIS.

“The recent outages and forthcoming turnaround will keep PP supply from the Gulf tight. Although we do admit that prices are relatively high now, converters do not really have much bargaining power because of the short availability,” a Saudi PP maker said.

GCC-based PP makers are targeting a roll-over in prices for May delivery, because of the unchanged supply-demand fundamentals from this month.

Saudi producers plan to offer May PP raffia grade at $1,570-1,600/tonne DEL (delivered) GCC/East Med - the same prices they quoted in April.

In the Saudi domestic market, most May shipments for the material were concluded $1,550-1,570/tonne DEL Saudi Arabia, stable from April settlements.

Petrochemical major SABIC has been running some of its PP facilities in Saudi Arabia below capacity in March because of a prolonged propylene shortage in Yanbu, and a planned shutdown at its Al Jubail plant.

“Inventories are still very low whether it is in Saudi Arabia or at the warehouses in southeast Asia and China,” said a source close to SABIC.

A power outage at Al Jubail in January had also reduced PP production.

Early this month, another PP producer Saudi National Industrialisation Co (TASNEE) also had an outage at its 720,000 tonne/year PP unit because of technical issues.

Meanwhile, Advanced Petrochemical Company (APC) will shut its two PP lines in Al-Jubail in May for a 30-day turnaround. Each of its PP line has a nameplate capacity of 225,000 tonnes/year.

In the UAE, Borouge had a brief outage at one of its two PP lines in Abu Dhabi this month because of mechanical issues. Its PP lines have a combined nameplate capacity of 860,000 tonnes/year.

Elsewhere in the GCC, Oman Oil Refineries and Petroleum Industries Company (Orpic) is currently running its Sohar-based 340,000 tonne/year PP unit at 70% of capacity on a lack of propylene supply from its upstream refinery at the site, a source close to the company said.

SABIC markets PP from the following plants in the Middle East:

Company	Location	Joint venture details	Nameplate capacity (tonnes/year)
Saudi Kayan Petrochemical Co	Al Jubail	SABIC (35%), Al-Kayan Petrochemical Company (20%), public shareholders (45%)	350,000
IBN ZAHR Saudi-European Petrochemical Company	Al Jubail	SABIC (80%), Ecofuel-Italy (10%), Arab Petroleum Investment Corporation APICORP (10%)	320,000
			320,000
			500,000
YANPET Saudi Yanbu Petrochemical Company	Yanbu	SABIC (50%) joint venture and Mobil Yanbu Petrochemical Company (50%) (an affiliate of ExxonMobil Chemical, USA)	260,000
YANSAB Yanbu National Petrochemical Company	Yanbu	SABIC (51%), Public Shareholders (39%), other companies in the Gulf region (10%)	400,000

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ong Sheau Ling
+65 6780 4359

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