The effect from the outage at Iran’s West Ethylene Pipeline is keenly felt in polyethylene (PE)-deficit China, where domestic prices are on an upward trajectory amid supply disruptions from the US-sanctioned country.
Iran, the second largest polyethylene (PE) supplier to China after Saudi Arabia, is in the process of fixing its mega ethylene pipeline that feeds several petrochemical plants in the country, following a blast early this week.
With reduced volumes, domestic polyethylene (PE) import prices in China have increased and there is more room for prices to move upwards.
“The impact of the heavy flooding in Iran is that the May-arrival Iranian cargoes would be tighter,” one Chinese trader said, adding that the volumes shipped out from Iran during late March were normal.
On 9 April, low-density PE (LDPE) import prices in east China were assessed at yuan (CNY) 8,900-9,000/tonne EXWH (ex-warehouse), up by CNY125/tonne from the level assessed on 5 April, ICIS data showed.
Over the same period, import prices for high-density PE (HDPE) low MI injection in east China rose by CNY75/tonne to CNY8,600-8,650/tonne EXWH.
Both Iran’s Ilam Petrochemical and Kordestan Petrochemical shut their PE units since the pipeline explosion in western Kermanshah province on 7 April, following three consecutive weeks of torrential rain and then landslides.
Iran’s Kermanshah Petrochemical which also relies on this pipeline is being operated at half the capacity at best, according to Chinese distributors who traded Iranian cargoes.
Two other Iranian PE plants by Mahabad Petrochemical and Lorestan Petrochemical, may be taken offline if the ethylene pipeline were to remain offline.
“They are using ethylene inventories to operate their PE plants [in the meantime],” one Chinese distributor said.
Another source who worked in Iran reflected that Bakhtar Petrochemical planned to sell ethylene as the feedstock could not be sent to the derivative PE plant successfully.
The Iranian companies were not available for comment.