Indonesia's Polytama suspends polypropylene allocations

Indonesia's Polytama suspends polypropylene allocations



Pertamina has shut the refinery in west Java to prevent the fire, which broke out at one of Balongan's tanks, from spreading. There is currently no disruption to supply of oil products to the market, Pertamina said, and investigations are underway to determine the cause of the fire.

But a prolonged shutdown of the refinery may curb its availability of feedstock supplies for Polytama. The Balongan refinery can produce up to 490,000 t/yr of propylene. Polytama sources around 90pc or more of its propylene requirements for its 300,000 t/yr PP plant, also in Balongan, from Pertamina's refinery via local pipeline transfer.

Polytama in 2015 completed the construction of propylene transfer facilities at the port of Cirebon in west Java, which is the closest to its PP plant other than the Balongan port and Pertamina's refinery. But the producer remains highly dependent on feedstock supplies from Pertamina because of some restrictions at the Cirebon port.

Polytama in mid-February cut its PP production because of reduced feedstock supplies from the Balongan refinery, resulting in a heavy backlog of PP orders that lasted up until March, according to market sources.

Operations at Polytama's PP plant in the coming weeks will depend on whether feedstock supplies will be disrupted by the Balongan refinery shutdown and, if so, how soon the refinery can restart. Any disruption to Polytama's PP production could stem PP price declines in Indonesia in the short term. 

Indonesian PP raffia prices rose by 20pc or $240/t in just a month to $1,450-1,480/t cfr Indonesia on 18 March, as massive production losses in the US caused by a winter storm tightened global PP supplies. But PP raffia prices dropped to $1,420-1,460/t cfr Indonesia on 25 March, reversing a steep rise since mid-February. Some exporters were last week reducing PP offers to Indonesian buyers in response to weak demand.

Chandra Asri is another PP producer in Indonesia and operates a 590,000 t/yr PP plant in Cilegon, west Java.




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