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August 30, 2012 02:00 AM

Hurricane Isaac shuts down resin production

Frank Esposito
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    AKRON, OHIO (Updated Aug. 31, 2:30 p.m. ET) — Sizable amounts of polyethylene, polypropylene and PVC resin capacity in Louisiana were shut down as Hurricane Isaac moved through the Gulf Coast.

    As of 1 p.m. Aug. 29, more than 30 percent of North American PVC capacity was offline, according to a report from IHS Chemical, a consulting firm in Houston. That included Louisiana-based plants operated by Formosa Plastics Corp. USA, Georgia Gulf Corp., Shintech Inc. and Westlake Chemical Corp. However, Formosa's plant in Baton Rouge was operating at full rates by the morning of Aug. 31, a company spokesman said.

    Other outages included almost 22 percent of the region's low density PE capacity, almost 13 percent of its high density PE and almost 12 percent of its linear low density PE. The PE closings include plants operated by Dow Chemical Co. and ExxonMobil Chemical Co.

    Dow's LDPE plant in Plaquemine, La., and Westlake's LLDPE plant in Lake Charles both continued to operate.

    In a news release, officials with ExxonMobil in Houston said the firm would “begin the process of returning to normal operations” once it had confirmed that its systems were safe and operational.

    A spokesperson with Midland, Mich.-based Dow said the firm's sites in Louisiana were “in the assessment and recovery phase of our hurricane plans.”

    “As we are still dealing with some challenges from the storm, protecting the safety and health of our employees and our communities remains top priority,” the spokesperson wrote in an e-mail. “Once the assessments are complete, the company will begin to mobilize maintenance and operations teams to bring utilities back on line as soon as it is safe to do so.”

    In PP, Pinnacle Polymers LLC had shut down its plant in Garyville, La., which represents about 10 percent of North American capacity. The Pinnacle plant was unable to receive raw materials needed for PP production, according to PetroChem Wire, a consulting firm in Houston. PP plants operated by ExxonMobil in Baton Rouge and by LyondellBasell Industries in Lake Charles remained open, according to IHS.

    The plastic feedstock most affected by the storm was styrene monomer. Almost 40 percent of North American capacity for that material was out of commission as of 1 p.m. Aug. 29, according to IHS.

    The storm brought heavy rains, but was weakening as it moved through the Louisiana Gulf Coast, according to an Aug. 30 report from the National Weather Service. It had been downgraded to a tropical depression by the service by 10 p.m. Aug. 30.

    As of early Aug. 31, the storm had been responsible for three deaths and had left more than 800,000 resident without power in Louisiana, Mississippi, Arkansas and Alabama. The storm made landfall in the U.S. on Aug. 28 — exactly seven years after Hurricane Katrina blasted the Gulf Coast, resulting in 1,800 deaths.

    The impact of the closings on resin markets might not be extreme, unless producers have to declare force majeure in September, said Phil Karig, managing director of Mathelin Bay Associates LLC consulting firm in St. Louis. Previous hurricane-related shutdowns had caused large increases in resin pricing.

    “The storm's impact on resin plants in the hardest-hit areas is coming too late in the month of August to affect a lot of August pricing negotiations,” Karig wrote in an email.

    “Without major structural damage or unanticipated startup issues at plants following the storm, there's still a lot of time for September resin markets to return to normal,” he added. “The Labor Day holiday also takes at least one resin-consuming day out of September at a number of processors, which could reduce September resin consumption by a few percent and will help offset some of the inventory tightness caused by the hurricane.”

    Other plastic-related outages as of 1 p.m. Aug. 29, according to IHS, included:

    c Almost 11 percent of North American capacity for PET feedstock monoethylene glycol.

    c 18 percent of capacity for ABS and polystyrene feedstock butadiene.

    c 7 percent of capacity for styrene precursor benzene.

    c 17 percent of capacity for styrene butadiene rubber.

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