Expect HDPE closures in CEE later rather than sooner: bank

23 July 2013 13:49  [Source: ICIS news]

LONDON (ICIS)--New, lower-cost high density polyethylene (HDPE) capacities coming onstream in the Middle East will probably not prompt HDPE closures in central and eastern Europe (CEE) in the near future, Erste Group Bank said on Tuesday.

“It is possible some [CEE] plants will be closed down, but the question remains what the companies could do with their ethylene output,” said Tamas Pletser, an analyst at Austria-based Erste.

“They may turn it into PVC [polyvinyl chloride], where the demand is even weaker, or cut the entire process and make more gasoline instead, but I do not see either of these options as real, so closures may happen rather later than sooner and may affect other production chains as well,” he added.

The threat posed by HDPE from the Middle East – produced with low-cost ethane feedstock, rather than oil-derived naphtha – was brought into sharp focus by the latest of a string of European HDPE closure announcements, namely news of Borealis’ plans to close an HDPE plant in Burghausen, Germany at the end of 2014.

Buyers reacted by saying they were not concerned as new Middle Eastern supplies would amply meet their needs.

Borealis cited “the challenging economic situation in regard to polyolefins production, and in particular HDPE in Europe” as one key reason for the plant closure.

HDPE is used widely in the packaging and household goods sectors.
By: Will Conroy
+44 20 8652 3214

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