ExxonMobil to allocate HDPE from US plant after pipeline outage

HOUSTON (ICIS)–ExxonMobil will allocate high density polyethylene (HDPE) produced at its Baton Rouge Polyolefins Plant because of an unplanned outage of a pipeline, a market source said on Thursday.

The allocation, which means that buyers are likely to receive less product than ordered, will occur “as a result of an unplanned outage on a third party pipeline impacting ethylene supply” to the plant, according to a copy of an ExxonMobil letter, obtained by ICIS.

“ExxonMobil Chemical very much regrets the impact that this supply disruption may have on your business,” the company added.

ExxonMobil has the capacity to produce 900,000 tonnes/year of HDPE at its Baton Rouge plant, according to market sources. It is the second biggest HDPE plant in the US.

The allocation comes amid market talk for a likely flat settlement for August contract discussions as most producers had in recent days moved increases for all grades of PE at an average 5 cent/lb ($110/tonne, €83/tonne) to September.

A market source said that with the allocation there could be stronger pressure for an increase of the HDPE grade.

ExxonMobil has a second HDPE plant in the US which is located in Mont Belvieu, Texas, with a 240,000 tonne/year capacity, sources said.

($1 = €0.75)