VINACHEM

SINGAPORE (ICIS)--Saudi Basic Industries Corp (SABIC) plans to shut eight major monoethylene glycol (MEG) units in the country this year, lending additional upward pressure on Asia MEG supplies, a source close to the company said on Thursday.

Six units will be shut in the first half of the year. The remaining two will be shut in the last quarter to avoid the high temperatures during summer.

"Given such [a] heavy shutdown schedule mostly in the first half of the year and no additional capacity coming on stream this year, we have the belief that Asia MEG prices would stay firm for most of 2011," the source added.

Two of the eight shutdowns had just, or were going to be, finished this month.

Jubail United Petrochemical Co (JUPC) completed a month-long turnaround at its 700,000 tonne/year No 1 plant at Jubail on 8-9 January. Yanbu National Petrochemical Co (Yansab) was expected to restart its 770,000 tonne/year unit at Yanbu in a couple of days after a 10-day shutdown from early January.

In February, Saudi Yanbu Petrochemical Co (Yanpet), the joint venture between SABIC and ExxonMobile, expects to take its 380,000 tonne/year No 1 unit at Yanbu off line for two weeks, said the source.

This will be followed by a two-week shutdown in March at Eastern Petrochemical Co (Sharq)'s 450,000 tonne/year No 3 plant at Jubail, the source added.

Sharq is a joint venture between SABIC and a consortium of Japanese companies led by Mitsubishi Corp.

In the second quarter, SABIC has planned a 35-day turnaround at two other plants.

JUPC's 640,000 tonne/year No 2 unit would be shut from the middle of April to late May, while Yanpet's 520,000 tonne/year No 2 line was expected to come off line from early May to the middle of June, the source said.

Saudi Kayan Petrochemical would have its new 650,000 tonne/year plant at Jubail shut in October for 12 days, the first maintenance after its start-up in September-October 2010, the source added.

Sharq’s 450,000 tonne/year No 2 plant will be shut for 10 days in December, the source said.

"SABIC’s shutdown schedule sets the tone for a tight spot MEG supply in Asia, especially in the first half of the year, which will in turn firm up prices through active spot trading," said a major Japanese trader.

"Although it is too early to predict the impact of these shutdowns, but that explains why end-users and traders were desperately seeking more contract volumes at the end of 2010 to secure supplies in the new year," said a major Chinese polyester end-user.

SABIC, the world’s largest MEG producer, has a total capacity of 5.71m tonnes/year in Saudi Arabia.