MOSCOW (MRC) -- Austrian-based petrochemical producer Borealis last week issued a force majeure declaration for its Stenungsund steam cracker in Sweden, the company told S&P Global Tuesday.
"On 8 April 2020 Borealis had to declare force majeure (FM) for its cracker operations in Stenungsund, Sweden as a consequence of a technical incident. Affected customers have been informed of potential reductions of delivered volumes. At this point in time we do not know when the FM will be revoked," a company spokesman said.
Borealis' cracker in Stenungsund can produce 625,000 mt/year of ethylene. The company's other cracker in Porvoo, Finland, can produce 400,000 mt/year of ethylene. Both crackers are able to process a mix of feedstocks including liquids, LPG and ethane.
Last week, Borealis said it had lowered its steam cracker operating rates.
"Our steam crackers are ... operating at reduced rates due to Covid-19 impact as overall demand is lower," Borealis said, without giving further details.
Resin converter sources said that both the Borealis FM and other refinery and cracker run rate reductions had impacted production of key polyethylene grades used in the supply of resin to key flexible packaging used in the food, pharmaceutical and hygiene segments, where demand has been strong since March due to the coronavirus pandemic.
The refinery and cracker operating cuts were introduced in the aftermath of the collapse in the oil price and the coronavirus lockdowns across Europe, which conspired to tighten the supply of products such as plastics, and some producers of these resins have seen more limited supplies as a result of the production cuts in place up the supply chain, sources said.
Cracker output is being limited, a polymer trader said Tuesday, as is refinery output. "First of all, naphtha will be reduced ... If you don't produce gasoline. If you reduce gasoline in general by 25-50% I think its a good time to buy (cracker products such as PE resin grades). I think that there will be some bottlenecks from some refineries and polymer plants (as a result)", the trader said.
The trader said he had seen reductions in his supplies of low and linear low density PE and "was asked to wait until the second half of April, and they have to keep [them] for other applications/medical buyers. They have cut allocations to 50% and are now struggling to get the other part in the second half of the month, which shows me that supply is tight."
As MRC informed before, in early October 2019,, Austrian polyolefin supplier Borealis AG lifted a force majeure declared in the previous months at its production site in Kallo. On 2 Sep, 2019, the company declared force majeure on refinery grade propylene and propane from its production site in Kallo, Belgium, as a consequence of “unforeseen technical issues."
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.