US to export more LLDPE to Asia after Saudi attacks

Increased volumes of US-origin linear low-density polyethylene (LLDPE) are likely to head for Asia-Pacific amid an unexpected supply shortage from Saudi Arabia.

LLDPE supplies from Saudi Arabia are expected to tighten in the coming weeks, leading to reduced exports to Asia-Pacific.

Saudi-based petrochemical producers are coping with reduced feedstock in the aftermath of the attacks on two key oil installations in Saudi Arabia on 14 September. The attacks at the Abqaiq plant, the world's largest crude processing facility, and the Khurais oil field infrastructure forced state-owned Saudi Aramco to shut in 5.7mn b/d of crude output.

Saudi LLDPE production is likely to be affected in the coming weeks, with producers telling international clients privately to expect supply delays to existing orders. Saudi producers are regular sellers to China and southeast Asian markets such as Vietnam and Indonesia.

As US increases its LLDPE output this year, producers such as Dow and ExxonMobil are able to comfortably meet any shortfall from Saudi Arabia from their Texas operations.

Dow Chemical operates a 400,000 t/yr LLDPE plant in Freeport, while ExxonMobil has a 650,000 t/yr LLDPE plant at Mont Belvieu. ExxonMobil also started up its 650,000 t/yr LLDPE plant in Beaumont in late July.

US-origin PE is sold directly by producers. Trading firms such as Vinmar and Tricon, which have a presence in Asia-Pacific, also sell US-origin LLDPE to their southeast Asian customers.

The US also plans to debut new LLDPE capacity this year. Production at Sasol's 450,000 t/y LLDPE plant in Lake Charles, Louisiana is ramping up. Sasol has an office in Singapore, where it is expected to market its products to Asia-Pacific customers.

US-origin material is still subject to restrictive tariffs in China amid the continuing US-China trade war, making southeast Asia the most viable market for US producers.

LLDPE prices were assessed at $870-880/t cfr southeast Asia and $830-840/t cfr China on 12 September prior to the Saudi attacks, according to Argus data.

Indicative offers from global producers in China were at $880-900/t cfr China yesterday, although the response from key plastic converters was muted.