Iran PE may run on lower rates after floods: Update

Adds market reaction in paragraphs 2 and 7-10

Iranian polyethylene (PE) production may be reduced after deadly floods in the country damaged a key ethylene pipeline.

But PE producers, who just returned to work after the long Nowruz holidays, have enough inventories to last a few weeks to meet any short-term supply gap.

The West Ethylene Pipeline (WEP), which runs from the Mideast Gulf port of Assaluyeh to Mahabad, supplies feedstock to a number of petrochemical plants in Iran. Affected PE units are likely to run on lower rates for about two or three weeks.

Floods hit many parts of Iran last week, killing around 70 people and displacing thousands of others. Repair works for the WEP will start when water levels subside.

Iran is a key supplier of low-density polyethylene (LDPE), linear low-density polyethylene (LLDPE) and high-density polyethylene (HDPE) film into China, Turkey and India.

Stocks have been high in Iran since early March because of tepid demand in China, which is the main market for Iranian polymer producers.

The impact of the Iranian floods on spot PE prices in China has so far been muted. Weekly LLDPE prices were at $1,020-1,050/t cfr China and HDPE film prices were at $1,080-1,110/t cfr China on April 4, according to Argus data.

PE producers in the Middle East had not indicated any price increases related to the floods.

Sentiment for PE is stable to firm in China. A value-added tax cut on polymers boosted buying sentiment.