Phillips 66 limiting polypropylene deliveries

By Frank Esposito
Senior Staff Reporter

Published: July 2, 2013 3:08 pm ET
Updated: July 2, 2013 4:37 pm ET

Related to this story

Topics Materials, Resin Pricing, Materials Suppliers

An already-tight North American polypropylene market has taken one step forward, but two steps back.

Just as Formosa Plastics Corp. USA has exited force majeure conditions for PP at its plant in Point Comfort, Texas, PP maker Pinnacle Polymers has reported production problems at its PP plant in Garyville, La., and Phillips 66 is having problems sourcing propylene feedstock for its PP plant in Linden, N.J.

Livingston, N.J.-based Formosa had been operating under force majeure for less than a month. In a June 11 letter to customers, polyolefins vice president and general manager Ken Mounger said that the firm’s PP units in Point Comfort “have experienced unplanned outages” and was declaring force majeure as a result. No details were provided as to the reasons for the outages.

Garyville-based Pinnacle declared force majeure in late June. Declaring force majeure “will impact our ability to fulfill orders,” Pinnacle President Mark Knorr said in a June 24 letter to customers.

The situation “is the result of an interruption in the normal supply of [propylene] monomer to our plant from multiple sources,” he added. “We are unable to calculate the impact of this interruption at this time.” Pinnacle operates about 800 million pounds of annual PP capacity at its plant.

In Linden, the fatal explosion that closed Williams Cos.’ olefins plant in Geismar, La., now has led Phillips 66 to limit deliveries of polypropylene resin from its PP plant.

In a July 1 letter to customers, Phillips 66 PP and marketing director Greg Osterholt said that his Houston-based firm “is compelled to reduce deliveries of [PP] product at this time.” The firm also will “apportion the material we have available to our customers in a fair and reasonable manner” in order to build inventory in advance of a planned maintenance turnaround. The 45-day turnaround was set to begin on Oct. 1.

Two workers were killed and 76 injured in the June 13 explosion at the Geismar plant operated by Tulsa, Okla.-based Williams. The plant remains closed, and no cause of the explosion has been identified. The plant’s main product was ethylene, with annual capacity of almost 1.4 billion pounds. But it also had annual capacity of 90 million pounds of propylene.

In a June 24 news release, Williams officials said that the explosion originated in the propylene fractionator area of the plant. Several pieces of equipment in the area just adjacent to the propylene fractionator have been seriously damaged and will likely need to be replaced, they added.

Officials also said that “significant amounts” of the electrical power cable and control wiring in the plant will need to be replaced.

The plant was “the principal additional source of [propylene] feedstock for Phillips 66’s Linden site, which is known as the Bayway plant. The plant has annual capacity of about 800 million pounds of PP.

The silver lining to the current PP outages — although PP makers might not agree — is the fact that PP demand in the U.S. and Canada has been soft in early 2013. Through April, demand was down more than 5 percent vs. the same period in 2012, according to the American Chemistry Council in Washington. Stronger demand would have worsened the effects of the outages seen by Formosa, Pinnacle and Phillips 66.


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Phillips 66 limiting polypropylene deliveries

By Frank Esposito
Senior Staff Reporter

Published: July 2, 2013 3:08 pm ET
Updated: July 2, 2013 4:37 pm ET

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