PE and PP prices in Asia may rise on supply constraints

11-Jan-10

Polyethylene (PE) and polypropylene (PP) prices in Asia may rise on supply constraints caused by Saudi Basic Industries Corp (SABIC) cutting its product allocations to the region, possibly pulling ethylene (C2) prices along, as per ICIS. Despite sharp falls in the linear low density polyethylene (LLDPE) futures market on the Dalian Commodity Exchange midweek, and losses in the equity markets dampened buying sentiment, PE and PP values in China and SE Asia have been impacted. SABIC doesn’t export ethylene from the Yanbu area so there’s no direct impact but if PE and MEG (mono ethylene glycol) prices go up, it could indirectly boost prices of the monomer. A power outage in late December disrupted operations of the Yansab, Yanpet and Ibn Rushd petrochemical facilities, where SABIC is working to restore normal operations. The two crackers at Yanpet with combined ethylene capacity of over 1.7 mln tpa have been restarted in early January, but the 1.3 mln tpa Yansab cracker continues to be off line and may only resume operations by the end of the month.