Canadian rail strike to be too short to affect US EG - sources

24 May 2012 22:07  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--The strike at rail carrier Canadian Pacific (CP) likely will be short lived and will unlikely affect the ethylene glycol (EG) market in the US, buyers and traders said on Thursday.

Rail carrier Canadian Pacific (CP) on Wednesday shut down its freight train operations across Canada after engineers and conductors began a strike in a dispute over work rules and pensions.

"There is a lot of precedence for the Canadian government stepping in to resolve when issues have broad impact on Canadian commerce," an EG buyer said. "Since this stoppage appears to be isolated to the CP engineers and operators the government may or may not act as quickly as they would if it impacted both CP and Canada National (CN)."

CP and its competitor, Canadian National, are Canada's largest rail carriers.

"Railroads are extremely significant to Canadian economy overall and options are limited," the buyer said.

Canada's federal government is prepared to introduce legislation to end a rail strike that entered its second day on Thursday, but it would prefer a negotiated deal, a minister said.

Labour minister Lisa Raitt said the government is prepared to introduce legislation to get the workers back to work.

"From past experience, I would not expect this to last a long time," a large diethylene glycol (DEG) buyer said. "If it lasted a week it would not affect the market."

"There are several turnarounds going on in Alberta right now, so there may be relatively little effect, depending on how long the strike lasts," a trader said.

MEGlobal shut its three MEG plants in Alberta in Canada for six weeks of maintenance in the second quarter. The work began at the end of April.

MEGlobal has two plants at Prentiss, with nameplate capacities of 320,000 tonnes/year and 278,000 tonnes/year; and a third plant at Fort Saskatchewan with a 380,000 tonne/year capacity, according to the company's website.

Canada's chemical industry transports close to 75% of its annual shipments on the country's railway system, with many producers relying exclusively on rail shipments.

By: Leela Landress
+1 713 525 2653

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