ExxonMobil shuts French PE production on “significant financial pressure”

Author: Linda Naylor

2019/12/13

LONDON (ICIS)--ExxonMobil has sent a communique to its customers informing them it has stopped polyethylene (PE) production at its Notre Dame de Gravenchon (NDG), France, site.

The site has a capacity of 500,000 tonnes/year of linear low density polyethylene (LLDPE), including metallocene linear low density polyethylene (MLLDPE).

The letter said its production of PE products has been impacted by a “number of external factors” that have put “significant financial pressure” on its production units.

“As a result we are currently in the process of reviewing upcoming production plans and cost structures to ensure, to ensure a continued viable and profitable production of high quality products for our customers.”

The letter - which was not dated, but signed by the EMEA PE sales manager - said that the company would be forced to implement a price increase for “certain products in January”.

No details were given as to which factors had affected the company, but imports have been circulating at very low prices in recent weeks.

ExxonMobil has a very strong position in the MLLDPE market in Europe, and its products command a premium. The arrival of new US MLLDPE into Europe at knock-down prices has led to price erosion, even for ExxonMobil.

At one point in recent weeks, MLLDPE C6 (hexene based) was said to be trading at standard C4 (butene based) LLDPE prices.

C4 LLDPE is the base LLDPE grade, and MLLDPE had been seen as a speciality, but the market was now widely seen as becoming commoditised.

PE margins have been falling as imports have been increasing in volume into Europe, mainly from the US, and ICIS data show that they are very low, with global margins possibly seen at their lowest point since 2000.

Low-end spot prices are lower than the €970/tonne FD (free delivered) NWE (northwest Europe) of the December ethylene contract.

PE is used in in packaging, the manufacture of household goods, and also in the agricultural market.

ExxonMobil, who has significant LLDPE production in Singapore and the US, was not available to comment.

(Update adds price chart)

(Thumbnail image source: ExxonMobil)