Mexico’s PE supply further hit by weather, poor logistics

19 September 2013 19:58  [Source: ICIS news]

HOUSTON (ICIS)--With a number of ongoing maintenance turnarounds and weather-related supply problems, polyethylene (PE) buyers in Mexico are worried more about availability of material than price increases, buyer sources said on Thursday.

PE supply has been vastly reduced by programmed maintenance at Mexico’s Cangrejera cracker, as well as maintenance on other domestic PE plants.

The 650,000 tonne/year Cangrejera cracker stopped operations on 12 August for programmed maintenance that will last until 2 October, according to the work schedule.

There is ongoing maintenance on one of three low-density polyethylene (LDPE) trains at the Cangrejera facility. Two other trains (100,000 tonnes/year each) are working normally.

The idled train 2 at the Cangrejera facility is scheduled to restart at the end of September.

Shortages of ethylene due to the Cangrejera cracker maintenance have forced the two local high-density polyethylene (HDPE) plants to stop.

In addition, the 300,000 tonne/year plant Morelos swing plant (HDPE/LLDPE) was stopped for maintenance on 9 September.

Storms hitting the country on both coasts have created special problems for the delivery of plastic resins.

Copious rains in the petrochemical production areas of Veracruz and Altamira have curtailed deliveries of plastic resins from the Gulf of Mexico coast to Mexico City and other important industrial centres such as Monterrey and Guadalajara, sources said.

On the Pacific coast, the Acapulco area has been hit hard by storms, stranding tourists. The highway that joins Acapulco with Mexico City has been closed by rocks and mudslides.

Some buyers bought PE material ahead of time, envisioning that supply would tighten with the Pemex maintenance turnarounds, but after distributors’ stockpiles run out, supply will get more complicated.

The strong rains are likely to further delay completion of maintenance works in Mexico’s ethylene and PE plants.

Imported PE resins are also in short supply, particularly for rotomoulding material, sources said.

Sellers of imported material are having problems of their own with shortages of HDPE in the US caused by plant outages in that country.

Pemex implemented strong price increases for all grades effective 5 September, with hikes ranging from 7.5-8.5% depending on grade.

Import prices have gone up by 2 cents/lb for some players, instead of the 5 cents/lb initially sought by sellers, buy side sources said.

By: George Martin
+1 713 525 2653

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