UpdateSABIC PE, PP plants at normal rates but low on stock

04 October 2012 12:58  [Source: ICIS news]

SABIC building (source: SABIC)LONDON (ICIS)--Saudi petrochemical major SABIC is running its polyethylene (PE) and polypropylene (PP) facilities in Al-Jubail, Saudi Arabia, at normal operating rates, but its inventory levels are depleted because of good sales over the past few months, a source at the company said on Thursday.

"We are not running plants at reduced rates. There is no issue with gas feedstock at all. That was a couple of months ago. Now we are running at full rates," the source said.

Buyers said they are experiencing difficulties in securing product from SABIC, with many assuming the Saudi major was running its plants at reduced operating rates because of gas feedstock issues.

"We do have lower inventory levels, everybody does. This is because we had good sales in the last few months," said the SABIC source.

Allocations to customers have been reduced, but only slightly, the source added. "Nothing major… We are not offering as much as 2-3 months ago but we are not cutting on a wide level, it is quite normal."

Most buyers across the Middle East said they received reduced allocations for October delivery and said it was as a result of lower production output at SABIC.

“We have to cover the shortfall from other producers,” said a PP converter based in the United Arab Emirates (UAE).

“Our allocations were cut by more than half,” said a PE and PP processor based in the Gulf Cooperation Council (GCC) region.

Besides tight supply in the Middle East, SABIC also cut its allocation to Pakistan and India, said south Asian traders and converters.

""Maybe customers thought [when] product was not widely available in the market because of lower inventory, they thought it was because of lower production rates. [Also], customers are having problems because of the congestion issues at the port," said the SABIC source.

Offers by SABIC are largely higher than from the rest of the GCC producers, buyers maintain.

A Middle East PE and PP producer that assumed SABIC was running its plants at low rates said: “It depends on how long this low run rate will last. Given the congestions at the Saudi Arabian ports, supply from Saudi Arabia in the near term will be low.”

“Prices may be supported somehow because of the supply shortness, although demand is seeing signs of weakness heading to the end of the year,” said another Middle East PE and PP maker.

Additional reporting by Ong Sheau Ling

SABIC markets PP and PE from the following plants:

Company

Product

Nameplate capacity (kt/year)

Arabian Petrochemical Co (Petrokemya)

HDPE

400

LLDPE

400

Eastern Petrochemical (SHARQ)

HDPE

400

400

LLDPE

400

350

Al-Jubail Petrochemical Co (Kemya)

LLDPE

850

LDPE

220

Saudi Kayan Petrochemical Co

HDPE

400

PP

350

Ibn Zahr (Saudi European Petrochemical Co)

PP

320

PP

320

PP

500



By: Cuckoo James
+44 (0) 208 652 3214



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