South Africa PE production problems persist following maintenance

15 October 2013 17:06  [Source: ICIS news]

LONDON (ICIS)--The South African PE market remains extremely short of low density polyethylene (LDPE) and high density polyethylene (HDPE) because of ongoing production problems facing a domestic producer following planned maintenance in September, participants said on Tuesday.

Furthermore, the shortages could soon extend to LLDPE.

While the plant is said to have started up on 4 October, there have been further issues, market sources said.

“There’s a shortage in the market, mainly HD and LD, and LLD could be a problem,” a trader said. “We're getting a lot of enquiries, customers who've not traditionally imported will do so. [But it will be] too late. It couldn't be much worse. There’s not much we can do.”

ith the traditional high season in October and November, a supply shortage is having a serious impact.

"Given the severity of LDPE shortages, and a potential shortfall of LLDPE, people will have to look for alternatives for October and November," a distributor said.

"Customers will be livid, it’s been a very tough year for the industry [in terms of poor demand]. It’s now busy for customers but they have no stock. There’s panic buying.

"We have to fight them [customers] off with sticks! [Some of them] haven’t bought a single thing off us throughout this year [as they deemed prices too high], now they want this and that. If it’s not our regular customers, I have to say no. I have to police our material."

While problems are often said to occur following maintenance, stockpiling in preparation was not possible for many.

A recent weak South African rand against the US dollar made imports expensive.

Furthermore, participants did not want to be left with extra stock if there were no problems with domestic production.

"We couldn’t import a big parcel in case [the producer in question] had no problems," the distributor said. "You’d sit on that stock going into shutdown. It’s a gamble whatever way you go."

The problems are thought to stem from contaminated feedstock ethylene from the plant in question.

The producer concerned said: "We have recently released a formal communication to our customers which confirms that ethylene availability is affecting both LDPE and LLDPE production and stock levels.

"At this point the situation is currently only affecting LDPE grades, however the situation may impact on LLDPE into November.  The LDPE plant is currently online, however the duration of operation will depend on the feedstock situation. Unfortunately I am not in a position to give any further details."

By: Jo Pitches
+44 208 652 3214

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