Polyethylene exports from USA delayed on rising logistic issues

20-Apr-15

A considerable slowdown has been noticed in polyethylene exports amid a series of constraints throughout the logistical chain, making it increasingly difficult for traders to secure resin from producers, as per market sources in Platts. This slowdown that has come at a time when rising global prices and limited supply in Asia and Europe have opened arbitrage windows for US PE, could persist till the end of next month. The biggest issue has been a lack of available warehouse space in the Houston area, which sources said stems from a significant amount of buying by exporters in late March and early April. Preliminary data released this week by the American Chemistry Council showed a 32.6% uptick in export resin sales for March compared to February, partially due to efforts to lower high US inventory levels before the end of Q1. Bulk resin arrivals flowed into warehouses by rail car and storage levels quickly neared capacity, putting increased pressure on bagging operations. A shortage of trucks to transport the resin to the ports for loading onto ships has further slowed the process, coupled with the inability to secure shipping containers. As a result, inventory levels continued to swell as new cars arrived at a faster pace than bags were leaving. Earlier this month, a number of warehouses stopped receiving new rail car shipments, sources said in Platts. Though traders are buying, the warehouses are returning the carloads, resulting in an embargo on six or seven warehouses. Rail companies have now stopped delivering polyethylene shipments to some Houston area zip codes as a result of the rejected deliveries. Multiple industry sources said it could take another six weeks to work the resin through the system, meaning activity might not return to normal until the end of May. The latest round of logistical issues comes on the heels of shipping delays in early March, which were the result of several lost days of activity due to heavy fog and a collision between two vessels. A dispatcher with the Houston Pilots said operations were normal Friday, and ships were being loaded and unloaded at regular rates.