Patchy impact on ethylene, propylene derivatives from France strikes

LONDON (ICIS)–Ongoing strikes called by French labour union CGT have affected cracker operations at several sites in the country but the impact on derivatives production has been patchy so far, market sources said on Tuesday.

Force majeures on ethylene, propylene and butadiene (BD) supplies from French energy major Total’s Feyzin, Gonfreville, site as well as at the Lavera site were issued last week, according to sources, because of the difficulty in getting feedstock in as workers had blockaded nearby refineries and fuel depots.

Media reports on Tuesday morning said the industrial action had spread to all of France’s eight refineries and that workers had also voted to halt production at the Lavera cracker; however, derivative sources said the cracker was running but at reduced rates.

Chemical major INEOS said it was unable to comment at this time regarding the status of the Lavera cracker which it owns and operates as part of the 50:50 joint venture with Total.

Total had not yet responded to a request for comment on this and the status of its other French crackers.

The impacts on derivatives production has been patchy.

“There are a lot of contradictory reports,” a derivative producer said.

“There are no FMs [force majeures from our side]. I don’t believe we have got to that, we have not been faced with that situation.

A second derivative producer also said it had not been obliged to declare force majeure.

“Not yet, [no force majeure] from our side, but we don’t know how it’s going to evolve,” it said.

However, producer of chlorine-related products Innovyn a said on Tuesday it had declared force majeure on some of its derivatives produced at Tavaux including methylene chloride and epichlorohydrin, as a direct result of the strike action impact at the Feyzin cracker as well as on the rail transport network.

The first derivative producer said it was “playing around the strikes” but that it was difficult to find alternative ethylene and propylene sources and then there were the logistical problems to handle as well.

“It’s impossible to find ethylene, we have very limited options in this pocket,” it added.

The second derivative producer said its own operations at Fos were not impacted as LyondellBasell’s cracker at Berre was running normally, but it had reduced output at its units usually fed by the Lavera cracker.

Of the remaining French crackers, Versalis said its cracker at Dunkirk had not faced any severe consequences and was able to “grant all volumes of sales” in spite of the logistics issues.

“It’s a fragile situation” a source said, highlighting the uncertainties over the strike, particularly its duration.

June contract price talks for ethylene, propylene and BD will be getting under way this week. However, while sources do not expect the strike action to play any part in the upcoming discussions and ultimate outcome, not surprisingly the subject has cropped up.

“Some guys are already trying to take advantage [of this situation]”, a second source said, while others said they still expected only a feedstock pass through related adjustment for June.

The impacts of the strike action on spot markets has yet to be determined.

No fresh spot deals have been recorded this week but anecdotally some sources said they were prepared to pay higher prices due to need.


Refineries understood to be impacted by strikes across France

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Focus article by Nel Weddle