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Egypt’s second PE producer ETHYDCO starts ethylene production

  • 16/05/2016 (04:20)
Egypt is readying to welcome its second PE producer, ETHYDCO, at the end of May at the earliest. However, the producer has already started their ethylene production and made some deliveries to customers.

Back in 2015, Egyptian Petroleum Minister Sherif Ismail had revealed that they aim to establish transformational industries which will realize the highest revenues and added value to the Egyptian economy. In order to do that, the Minister had highlighted the importance of ensuring maximum usage of petrochemical raw materials locally while seeking to discourage imports. In this context, ETHYDCO was amongst the most important projects in the national plan as an ethylene and derivatives producer.

ETHYDCO has a cracker with 460,000 tons/year ethylene capacity while they will have 400,000 tons/year of integrated PE capacity. The company will be able to produce all HDPE grades and will have two production lines with a capacity of 200,000 tons/year each. One line will produce HDPE grades and the other line will be an HDPE/LLDPE swing line.

To track weekly developments in Egypt’s PE market, please see Egypt Weekly PE Analysis (For members only)

A source from the company confirmed this past week that they had started their ethylene production as of mid-March, in line with their initial plans.

“Our first ethylene production was out by mid-March and we have been operating smoothly since then while we have already made some deliveries. Now, we are focusing on our PE production as we are intensively working to start on-spec production by the end of May. However, for any reason, if we are unable to meet this date, we plan to start PE production after the Ramadan holiday when the lull of the Ramadan month is over. However, we feel that it may be critical to start our PE production by the end of May given the ongoing problems regarding the higher EGP/USD exchange rates in the country,” further added the source.

Meanwhile, Egypt’s first PE producer, SIDPEC, also confirmed obtaining some ethylene cargoes from ETHYDCO as of April. “ETHYDCO delivered some ethylene cargoes in April as we needed their materials in order to make up for the lack of ethane gas supplies from Gasco,” noted the source. SIDPEC had to halt their operations briefly in April given lack of ethane gas supplies from their supplier Gasco.

Looking at the PE market’s current state, the overall demand appears to have slowed down this past week. A distributor noted, “Local supplies are in line with current demand, which has noticeably slowed down compared to the previous week. The approaching month of Ramadan and the holiday at the end, coupled with tight liquidity in the market, weigh down on the buying interest.”

A trader also confirmed weak demand and slowing trading activities on the back of the liquidity issues, saying, “Most players anticipate lower offer levels in June and therefore, they limit their purchases to their immediate needs.”
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