LyondellBasell declares force majeure on acetic acid in Europe

Source: ICIS News

2018/02/23

LONDON (ICIS)--LyondellBasell has declared a force majeure on sales of acetic acid in the European market, a company source confirmed on Friday.

The company declared force majeure following an outage experienced by its acetic acid unit in La Porte, Texas on Friday, 16 February.

The shutdown in the US was due to the failure of a third-party carbon monoxide supplier, and led a few days later to a force majeure being declared by LBI on supplies of acetic acid to its US customers.

As on the other side of the Atlantic, supplies of material to consumers in the European market are being put on an allocation basis, although LBI is not disclosing publicly what that rate will be.  In the US, the allocation rate has been set at 70%.

The US force majeure expected to last approximately one month, and the one in Europe also through to the end of March. It is thought elsewhere in the market that LyondellBasell reacted swiftly to the shutdown because the 544,000 tonne/year plant had just come out of a turnaround a few days before.

One other supplier commented that “it couldn’t have come at a worse time”, possibly hastening the resort to force majeure.

Various players consider that the force majeure must have a noticeable impact on the balance of the European market, with clear implications for prices, given that the market is already quite tight.

Not all players necessarily agree with this perception, with one buyer referring to the outage as a “technical glitch”. The buyer felt that the issue would be used as a further argument to sustain recent price escalation, while disregarding other factors suggestive of a moderation in prices.

In any case, the reduction of supply to a market that is already contending with a squeeze on availability is likely to place it under further strain, at least in the short-term.