Argentina’s Petroken PP plant down on equipment failure

17 January 2013 23:19  [Source: ICIS news]

HOUSTON (ICIS)--Petroken’s polypropylene (PP) plant in Argentina has been down for about a week because of failure of key equipment, and it may restart in 30 days or more, regional sources said on Thursday.

The Petroken plant in Ensenada has a nominal capacity of 180,000 tonnes/year, but market sources estimate that actual production is about 150,000 tonnes/year.

The failure is said to involve a reduction box for the sole extrusion unit of the plant, according to market sources. Petroken declined to comment on operational issues, citing company policy.

The parts needed for repair must be imported, local sources said, and require a series of paperwork to obtain the corresponding import licence.

It is expected that the import licence will be readily granted, but because of the severity of the problem, the plant may not restart before 15 February, buyer sources said.

This is the largest PP plant in Argentina. The other producer, Petroquimica de Cuyo, has a nominal capacity of 150,000 tonnes/year and an effective capacity of about 120,000 tonnes/year.

The outage may put further strain on the region’s supply. Sources in Argentina estimate that even with both plants working normally, Argentina still has 1/3 production shortage, made up mostly with imports from Brazil.

PP buyers in Argentina, Brazil and other regional countries are already scrambling to make up the upcoming shortages with imports.

The production shortage will facilitate the implementation of PP price increases that are sure to come after the January propylene settlement in benchmark US markets at a 15 cents/lb premium over December values.

PP prices rose only about $30/tonne (€23/tonne) in Argentina for the month of January, but higher propylene costs and restricted PP supply are likely to bring a strong price increase in February.

($1 = €0.75)

By: George Martin
+1 713 525 2653

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