UK polyethylene (PE) and polypropylene (PP) buyers have been getting a surprise this week as some sellers have been informing them of changing terms for as early as April, as the official Brexit date looms.
A ship flying the British flag outside the Falkland Islands (source: Global Warming Images/REX/Shutterstock)Several have been informed they will be offered only on a duty unpaid basis, and that buyers may have to see to clearing customs themselves.
“I told them they can’t just change the terms of my contract,” said one buyer. “We have a contract in place.”
A major producer was heard to be offering all sales on a duty unpaid basis from April.
Another buyer said its haulier was not prepared to bring product from the EU into the UK in April.
“I will use somebody else,” said the buyer. “To be honest, I’m not worried. I’ve got April covered.”
“We are considering selling on a DDU [delivered duty unpaid] basis,” said a trader, “but we haven’t settled anything yet.”
Other sellers were taking a different approach.
“We are talking to customers and can offer a service of volumes in the UK,” said a PE producer.
“We are prepared for Brexit,” said a PP producer, who said it was keeping more volume in the UK than usual, but that an increased cost could be incurred by buyers for this product.
Most PE and PP buyers have built stock for whatever sort of Brexit might ensue, and several have said that by the end of April they would be using this stock, over concerns of working capital.
This could have an impact in mainland Europe, as demand is expected to be considerably lower in the UK by then.
The planned series of cracker maintenance outages will be in full swing by May, however, and sources are saying this will be a crunch point in the outages, affecting both ethylene and propylene.
SABIC and INEOS both have PE production in the UK: SABIC has a 400,000 tonne low density polyethylene (LDPE) plant at Wilton, and INEOS has a 330,000 tone/year C6 (hexene based) linear low density polyethylene (LLDPE) plant at Grangemouth, with a 285,000 tonne/year PP plant at the same site.
LyondellBasell also has a PP plant at Carrington, with an annual capacity of 210,000 tonnes.
There is no high density polyethylene (HDPE) production in the UK.
The date of Brexit is officially 29 March 2019, but there are political moves afoot to force a delay to avoid a no-deal situation.
PE and PP are used in packaging and the manufacture of household goods. PE is also used in agriculture, and PP in the automotive industry.
Source: ICIS News
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