Temporary tightness in global polyolefin markets

A series of seemingly temporary factors has kept global polyolefins markets very tight as per ICIS. Few long existing factors have also contributed to supply constraints, making it easier to absorb new capacities. * Reduced feedstock availability in the Middle East – including ethane and liquefied petroleum gas (LPG). LPG has been tight because of factors including reduced refinery operating rates and increased demand from petrochemicals in the Middle East. * Technical glitches and plant shutdowns in the Middle East amid longer than expected time taken by new plants to stabilise because of manpower, technical and other issues. * Logistics factors, including port congestion, repositioning problems with ethylene vessels, lack of sufficient ethylene vessels and not enough container vessels. Shortage of enough shipping space restricts operating rates because this prevents arbitrage (e.g. polyolefins to Europe from the Middle East). * Europe's inability to sell gasoline in big volumes to the USA, pushing down operating rates at refineries down, thereby restricting the availability of feedstock to petrochemicals. * A fall in US gasoline demand is restricting propylene availability in Europe most of the propylene comes from steam crackers so lack of naphtha is the problem here. * Lack of spending on maintenance is reportedly the cause of numerous outages in Europe. * Lack of enough low-density PE (LDPE) capacity, pushing plants that do exist being pushed so hard to meet demand that outages are occurring very frequently. * Shortage of butene-1 has been restricting linear-low density polyethylene (LLDPE) for over a year.
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