Over one third of France’s propylene capacity impacted by Total’s refinery strike

24-Feb-10

An already tight supply and demand balance in Europe ahs been aggravated by the refinery strikes at Frances’ Total that have impacted around 36% of France’s total propylene capacity, according to ICIS. The strike encompasses propylene producing fluid catalytic crackers (FCCs) at all five operational French refineries run by Total – Grandpuits, Donges, La Mede, Gonfreville and Feyzin. The sixth refinery at Dunkirk has been idled since September and has mainly contributed to the union action. Around 7,000 direct employees, suppliers and subcontractors at the refineries went on strike to demand restart of the Dunkirk site, likely to be shut down. Later the employees voted for open-ended strike, which was now threatening to engulf majority of France’s propylene capacity since unions had called for solidarity from ExxonMobil and INEOS refinery employees. However, as of now, INEOS, ExxonMobil, LyondellBasell and oil refiner Petroplus are running their refineries as normal. Market sources assume that the steam cracker linked to the Feyzin refinery has also been closed. Total is reported to have declared propylene force majeure at some of the sites, but this was not yet confirmed directly. This will further tighten the propylene supply in Europe at a time when imports also seem to be difficult because of a dearth of propylene globally. Some sources said that prices would be most definitely higher but largely theoretical since there would be no free volume. The refinery strikes are having a double effect on propylene by affecting upstream crude and naphtha prices as well as propylene availability itself. An increase from the February’s settlement at €875/ton was widely anticipated even before the latest constraints on supply, although the rise expected was more modest than last month’s €85/ton. Now, some contract players were revising their ideas. Problems in France amid production problems at crackers in Germany and in the Netherlands, are expected to make contract discussions difficult.