Sadara Impact in Europe
Europe chem markets mull growing impact of additional capacity from Sadara
In other markets, the additional capacity could provide some respite after prolonged tightness in supply.
For example, Sadara has already started up its polymeric methylene diphenyl di-isocyanate (PMDI) facility in Jubail, according to an earlier announcement this month.
Some participants in the crude MDI market expect the Sadara complex to bring relief to tight supply conditions that have developed in Europe.
Following multiple production issues in April and May 2017, crude MDI in Europe has become difficult to obtain.
“[The] situation should remain tight until October once all the plants will be [back] on stream, including Sadara,” a trader said in May.
However, others have questioned the effect Sadara will have on the European crude MDI market, leaving a mixed opinion among crude MDI sources on the site’s impact.
“I do not think Sadara material will come to Europe. Why should they ship to high costs to Europe when they could sell it in the region of Saudi Arabia… at higher prices?” said another trader in May.
“I assume no Sadara or less Sadara material will come here to Europe… the effect will be that material from Europe will not be exported, this material will stay in Europe.”
Although some markets have already seen the impact of the new Sadara production, such as in the PE market, other European derivative markets anticipate differing impacts on supply and, ultimately, on prices.
Nonetheless, Europe is likely to gain a clearer outlook on how the additional volumes will impact each market in autumn.
Contributing editors: Linda Naylor and Pavle Popovic
Focus article by Melissa Hurley
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