Resin makers throughout the U.S. Gulf Coast are dealing with the onslaught and aftermath of Hurricane Katrina. And many processors already are concerned about the impact the storm might have on resin prices.
Katrina hit the Gulf Coast region of Louisiana, Mississippi and Alabama on Aug. 29, bringing heavy rains and winds well above 100 mph.
More than 200 weather-related deaths had been reported as of Aug. 31, and regional officials feared that number would swell into the thousands. Authorities estimated 80 percent of New Orleans was flooded, while parts of Mississippi reported flooding as far as six miles inland. More than 2.3 million people in the region were without electricity.
On the resin side, the impact could constrict the raw materials picture further.
``Ethylene was tight to begin with and [the hurricane] won't help the situation,'' said Howard Rappaport, an industry analyst with Chemical Market Associates Inc., a consulting firm in Houston. A tighter ethylene market ``will heighten awareness on the cost side and prompt resin producers to consider asking for additional increases.''
In an Aug. 30 report, CMAI estimated 19 plants producing plastic feedstocks in Louisiana and Mississippi had been closed, and several more were running at reduced rates.
The shutdown list included six ethylene sites with annual capacity of 7 billion pounds, seven propylene sites (3 billion pounds), two styrene monomer sites (5.6 billion pounds), three benzene sites (300 million) and one butadiene site (600 million).
By Sept. 1, many of those plants were coming back into operation, although some remained at reduced rates. About 5-7 percent of U.S./Canadian ethylene supply was affected by the storm, CMAI's Rappaport said.
``The resin plants were shut down because their upstream monomer supply was shut down,'' he said. ``Right now, physical damage is under assessment, but we're not aware of any major physical damage to resin plants. Availability of material will be based on how long the power outages last.''
Availability of natural gas used by many plants also will be a key issue, as will the condition of rail lines used to transport raw materials to the plants and to send finished resin out to customers. The Henry Hub, a major natural gas terminal in Louisiana, was shut down for less than a day and then reopened. Rail officials also will need to inspect tracks to make sure they were not damaged by flood waters, Rappaport said.
Almost every resin plant in the region was affected by Katrina. Wellman Inc. stopped production Aug. 29 at its PET resin plant near Bay St. Louis, Miss., in anticipation of the storm. The site, known as the Pearl River plant, is about 50 miles east of New Orleans. Production at the plant, which has annual capacity of 500 million pounds, will be restarted as soon as possible. Officials with Shrewsbury, N.J.-based Wellman said customers will receive PET from the firm's plant in Darlington, S.C., until the Mississippi site begins operating.
Shintech Inc.'s PVC plant in Addis, La., also stopped production Aug. 28. The plant was unable to source natural gas needed for production after a pipeline originating in Texas was closed in anticipation of the storm, according to controller Dick Mason.
Shintech's Addis site remained unflooded and still had electricity as of Aug. 29. Mason said the firm advised employees who needed to cross the Mississippi River to reach the plant to stay home.
Most production units at Dow Chemical Co.'s major complex in Plaquemine, La. - including polyethylene and thermoplastic elastomer lines - are operational. Dow personnel are working to bring all operations back up safely, depending on availability of power, utilities, raw materials and transportation, officials said.
In Carville, La., Total Petrochemicals idled its polystyrene plant Aug. 28, but was bringing it back up Aug. 30, according to spokeswoman Karyn Grace. Formosa Plastics Corp. USA took down its PVC plant in Baton Rouge, La., Aug. 29, but spokesman Rob Thibault said the firm planned to resume production Aug. 31.
Production also stopped Aug. 27 at GE Plastics' ABS resin and alloy plant in Bay St. Louis. GE spokesman Chris Tessier said no decision had been made as to a restart date. ExxonMobil Chemical Co.'s chemical operations and refinery - including production of TPEs and ethylene propylene diene monomer - in Baton Rouge are operating at reduced rates, spokesman Russ Roberts said.
In Garyville, La., Pinnacle Polymers planned to bring its 900 million-pound-capacity polypropylene plant back up Sept. 1 or 2. The plant had been down since Aug. 28, but power was restored Aug. 31, according to President and Chief Operating Officer Jerry Theys. The nearby Marathon Oil refinery that supplies Pinnacle with propylene feedstock also was to reopen Sept. 1. Storm damage to the Pinnacle plant was limited to insulation, Theys said.