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NOVA Chemicals issues LLDPE force majeure declaration at Joffre facility in Alberta

Highlights

Force majeure covers all LLDPE butene resins; effective immediately

Length of force majeure uncertain: company

Houston — Nova Chemicals declared force majeure on supplies from its Joffre C4 (butene) linear low density polyethylene facility near Red Deer in Alberta, Canada, a company spokeswoman said in an email July 14 to S&P Global Platts.

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The declaration will cover all C4 LLDPE resins produced at the facility effective July 13, the company also said in a letter to customers obtained by Platts.

"Over the past several days we have experienced mechanical failures beyond our reasonable control at our two butene linear low polyethylene (LLDPE) reactors in Joffre. As the result of the repair timing and current inventory levels, we have declared force majeure on all butene LLDPE," spokeswoman Jennifer Nanz said in the email.

The event does not affect any of NOVA's other polyethylene products, Nanz said.

"We are committed to safely resolving these issues as quickly as possible. However, we do not yet know the expected length of the force majeure," Nanz said.

The Joffre facility has two LLDPE units with a combined capacity of 1.1 million mt/year, according to data compiled by Platts.

NOVA said in the letter it could provide "no firm indication" as yet on the extent to which the company would be able to supply its customers needs during the force majeure. Nanz could not provide any further information.

In recent weeks, US LLDPE prices have increased to their highest levels in about four months, since the US began to shutdown in response to the coronavirus pandemic.

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The demand for LLDPE butene has risen in domestic and international markets as countries continue to reopen and production begins to ramp up, according to sources.

Although pricing has hit new highs, allocations for exports are tight and the export market is not following at the same pace, one trader source said.

Platts assessed LLDPE butene unchanged July 13 at $738-$760/mt (33.5-34.5 cents/lb) FAS Houston with rail car pricing talked at 31 cents/lb.

The previous high for LLDPE was posted March 16 at $739-$761/mt (33.50-34.50 cents/lb) FAS Houston, with rail car pricing discussed at 31 cents/lb.

The LLDPE assessment has increased $44, or about 6.2%, since January 2, 2020, and has fallen $89, or 10.6%, on the year, according to Platts data.