Earthquake in Chile brings polymer production to a halt, prices hit all time highs

13-Apr-10
Chile's polymer production has been largely impacted by the earthquake that hit the country in February, propping up prices to record highs at a time of tight global supplies, leaving the market struggling to meet local demand, as per ICIS. The name plate capacity of the PE plant at Talcahuano is 42,500 tpa while Petroquim’s PP plant capacity is 150,000 tpa. A refinery in Talcahuano, operated by Empresa Nacional del Petroleo (ENAP) has been affected by the earthquake, negatively depriving Dow Chemical and Petroquim of their main source feedstock. Both companies have declared force majeure on shipments of polyethylene (PE) and polypropylene (PP) and proceeded to consume their inventories. Hence domestic players are turning to imports at a time of high raw material prices in the US Gulf and shortages of polymer export volumes in the western countries. Material from South Korea and China, usually seen as the last resort for Chile’s buyers, has become the best alternative for the nation price-wise, but the delayed delivery (pto 70 days in some cases) made the imports a risky proposition. Without the domestic alternatives, prices in Chile have surged to international levels and higher with the addition of shipping costs. LDPE offers from the US Gulf and Brazil ranged at US$1750-1830/ton CFR Chile Main Port, and is being sold to domestic converters at US2000/ton or higher. The best offers heard for LLDPE and HDPE have been from South Korea and China at about US$1580-1600/ton CFR Chile Main Port, but volumes were usually small and the offers did not last long. Since all Polystyrene (PS) consumed in Chile is imported, prices spiked as the earthquake disrupted port operations. Prices appeared to have stabilised at the current high levels, but polyolefins remained hard to get at any price.
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