Mexico PE supply tightens in April on ethane shortage

Focus article by Marianela Toledo

HOUSTON (ICIS)–Domestic supplies of polyethylene (PE) will likely tighten in April due to a shortage of ethane, a source familiar with the matter said on Thursday.

Limited production from Pemex and higher demand is causing the shortage, the source said. As a result, it is expected that production related to ethane, ethylene and PE will be hampered in April.

Low density polyethylene (LDPE) was said to be grade that is affected the most as a train at Pemex’s La Cangrejera site remains down because of maintenance.

In addition, ethylene inventories are still recovering after a cracker was shut down for 10 days in March.

Meanwhile, there are problems with resin supplies from Brazil and the US, a PE processor said.

The processor explained that Brazilian material was being sold into the market as part of the marketing efforts for Ethylene XXI. However, that material is no longer in stock in the market, the source said.

Ethylene XXI, a 75:25 joint venture between Brazil’s Braskem and Mexico’s Idesa, includes a 1.05m tonne/year ethane cracker, a 750,000 tonnes/year high density polyethylene (HDPE) unit and a 300,000/year LDPE unit.

Recently, Ethylene XXI started receiving ethane from Pemex.

The processor was reluctant to believe that HDPE production will began in April, but other two market participants, one in Brazil and one in Mexico were more hopeful, saying it is likely to occur.

Meantime, supply from the US was also said to be limited, the processor said.

In the US, market sentiment is that the onset of spring and early summer plant turnaround season is expected to tighten supply.

On the Mexico demand side, market participants said it is solid.

Facing a tight supply scenario and higher international prices, PE import prices are likely to increase in April, a market participant said.