Chevron Phillips, Equistar declare force majeure limits on polyethylene

By Frank Esposito
Senior Staff Reporter

Published: July 15, 2014 4:46 pm ET
Updated: July 17, 2014 8:32 pm ET

Image By: Chevron Phillips Chemical Co. Chevron Phillips Chemical Co.'s operation at Port Arthur, Texas.

Related to this story

Topics Materials, Materials Suppliers, United States
Companies & Associations Chevron Phillips Chemical Co. LP

UPDATED — Polyethylene makers Chevron Phillips Chemical Co. and Equistar have declared force majeure production limits on that material after incidents at their Texas plants — including a July 7 fire that injured two workers at a Chevron Phillips ethylene/propylene unit in Port Arthur.

No cause for the fire was given in a July 9 statement from Chevron Phillips, which is based in The Woodlands, Texas. The statement added that the injured workers remained hospitalized. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity.

In the release, officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident.

Equistar — a unit of Houston-based LyondellBasell Industries — has experienced “significant feedstock supply disruptions” at its PE plants in Matagorda and Victoria, according to a July 9 letter to customers. Those two plants are massive PE production sites, with combined annual capacities of about 5.4 billion pounds of high, low and linear low density PE.

LyondellBasell already had declared force majeure on ethylene feedstock made at its plant in La Porte, Texas. A LyondellBasell spokeswoman said the firm does not comment on operational matters.

Market sources said the situations at Chevron Phillips and Equistar could tighten supply in a North American PE market where demand has been lackluster so far in 2014. But the outages also could prevent regional PE resin prices from falling in July, as some buyers had anticipated.

“Any time you have outages like this, it’s possible that markets could get tighter,” said Phil Karig, managing director of the Mathelin Bay Associates consulting firm in St. Louis. “But a lot of [PE] price increases tend to start up in the spring. Increases you see in the market this time of year tend to be more defensive-type price increases.”

Markets for PE — and for HDPE in particular — already were tight, and are likely to get tighter because of the outages, according to Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas.

“The contract [PE buyers] will get what they need, but the secondary market won’t be able to get material,” he said. Burns added that he wouldn’t be surprised if regional PE makers try to raise prices in September. Producers “still haven’t reached the breaking point” for PE prices, he said.

Regional PE prices have not seen a decrease since late 2012. Since that point, five price increases have taken hold, leading major PE film extruders to take the rare step of trying to raise prices for their products even without an accompanying resin price increase.


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Chevron Phillips, Equistar declare force majeure limits on polyethylene

By Frank Esposito
Senior Staff Reporter

Published: July 15, 2014 4:46 pm ET
Updated: July 17, 2014 8:32 pm ET

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