Saudi Arabian Basic Industries Corp. (Sabic) has warned European traders and shippers it will sharply cut ethylene exports to their region next year.
OPEC News Agency (Opecna) quoted European Union sources as saying Sabic will slash ethylene exports to about 30,000-50,000 metric tons next year from the present 200,000 metric tons/year.
Sabic has already withdrawn from the ethylene spot market. As a result, the company has turned to third-party suppliers to honor its sales contracts to Mediterranean customers.
India's Reliance Industries, one of Sabic's biggest customers for petro-chemicals, is looking for ethylene supplies from Libya and Indonesia until its new cracker at Hazira goes on stream late in 1996. Reliance buys about 300,000 metric tons/year of ethylene worldwide.
Opecna said Sabic reportedly has told customers the main reason for reduced exports is that new derivative capacity in Saudi Arabia, expected to go on stream soon, will consume its surplus ethylene.
However, European industry sources told Opecna no particular Saudi Arabian project has been disclosed that will be able to take the volume of Sabic ethylene that will no longer be exported in 1996.
Saudi Arabia's Petrokeyma completed a 50,000 metric ton/year butene-1 expansion last August at Al Jubail. This project could at best consume an added 55,000 metric tons/ year of ethylene.
In addition, ethylene glycol capacity is being expanded by 60,000 metric tons/year at the Sharq plant, also in Al Jubail.
The IBN Rushd polyester complex at Yanbu, which has a 140,000 metric ton/year capacity, will require as much as 50,000 metric tons/year of ethylene glycol. It will be supplied by the Yanpet ethylene glycol unit at Yanbu.
But overall, no new Saudi Arabian polyethylene capacity could be identified as consuming additional ethylene next year, Opecna said.
European petrochemical industry sources suggested the real reason for the downturn in Sabic ethylene exports next year could be weak spot prices.
For example, Opecna said, ethylene prices are understood to have dropped by $50 to a new level of $300/metric ton for December delivery.
The sources pointed out that Sabic has taken similar action before. Last February, for example, it halted spot sales of methyl tertiary butyl ether because of low prices.
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