US Phillips 66 to limit PP deliveries on propylene shortfall

02 July 2013 22:45  [Source: ICIS news]

HOUSTON (ICIS)--US polypropylene (PP) producer Phillips 66 announced it will reduce deliveries of PP to customers, based on difficulty of obtaining enough feedstock propylene to keep up with production, sources said on Tuesday.

The company had previously announced it would have a limited ability to supply PP related to a 45-day turnaround at its Bayway complex in Linden, New Jersey, set to begin on 1 October. The Bayway refinery is the primary provider of propylene for the company's PP facility.

Phillips 66 said the propylene shortfall is compounded by the additional loss of propylene supply out of the Williams cracker in Geismar, Louisiana, resulting from a 13 June explosion and fire at the facility.

"Use of additional feedstock from Williams Partners would have allowed us to build additional inventory for the turnaround," the Phillips 66 said in a 1 July customer letter, obtained by ICIS.

The company said it is seeking other sources of feedstock but added that it could take as much as four months to qualify those other sources for use at its Bayway facility.

While the company did not specify allocation levels, it said it would "apportion the material we have available to our customers in a fair and reasonable manner so that we can build inventory to carry us through the turnaround".

The news follows a similar disruption last week, when Pinnacle Polymers declared force majeure on PP because of difficulty obtaining propylene at its facility in Garyville, Lousiana.

Formosa Plastics also declared force majeure for PP on 11 June.

Buyers have said other companies have indicated that they will have to reduce deliveries in July and August, also because of difficulty of obtaining enough propylene.

Supply in the PP market remains very tight, and this situation will only create more tightness, sources said.

Phillips 66 has a 350,000 tonne/year PP plant in Linden, New Jersey, according to ICIS plants and projects.

By: Michelle Klump
+1 713 525 2653

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