Updated — North American prices for most commodity resins rose in August, even before Hurricane Laura moved through the plastics-heavy U.S. Gulf Coast.
Sizable amounts of U.S. plastic resin and feedstocks production were taken down in advance of the storm, which made landfall near the Texas-Louisiana border on Aug. 26. Some of that capacity remains down, but most of it has begun to resume production.
Most resin plants near the Gulf Coast were left undamaged. But with most resin markets already tight, even short shutdowns could have an impact on availability and pricing of commodity resins throughout North America. Restoration of electricity and shipping challenges also could play a role in restoring production.
In a Sept. 4 email to Plastics News, a spokesperson for resin maker Dow Inc. in Midland, Mich., said that the firm has safely restarted Texas sites in Deer Park, La Porte, Bayport and Texas City and that those sites are back to pre-hurricane production rates.
The spokesperson added that Dow is to preparing its Sabine (Orange) and Beaumont sites in Texas to restart once power is restored at appropriate levels.
"We are very appreciative of the work the energy providers are doing to get power restored in the area as quickly as possible," the spokesperson said. "Dow is also providing support to more than 40 employees who have reported damage or losses due to the hurricane."
Even before the storm, tightening supplies and solid demand had sent North American prices for polyethylene, polypropylene, suspension PVC and solid polystyrene resins higher in August.
Regional prices for all grades of PE increased 5 cents per pound in August, with PVC up 3 cents and PS up 2 cents. For PE, it's the third consecutive month that prices have climbed, following a 4-cent hike in June and a 5-cent move in July. Some PE end markets have seen growth as a result of the COVID-19 pandemic.
"We have to determine the effect of [Hurricane Laura], but overall polyethylene demand is still strong," PE market analyst Mike Burns said. "Grocery stores are still full.
"Some processors are seeing record years," added Burns, who is with Resin Technology Inc. in Fort Worth, Texas. "Products for outdoor leisure activities are flying off the shelf."
The back-to-back-to-back summer price increases are rare for the PE market, based on previous price activity. A 5-cent increase is on the table for September. Burns added that 2021 could see "a major correction" in PE demand if COVID-related sales trends fade.
Market sources said that Westlake Chemical Corp., Chevron Phillips Chemical Co. and Sasol Ltd. have placed force majeure sales limits on PE resin. About 1.4 billion pounds of PE capacity operated by Westlake in Lake Charles, La., remains down, sources said, as does almost 2 billion pounds of PE operated there by Sasol Ltd. More than 900 million pounds of PE capacity operated by Chevron Phillips in Orange, Texas, also remains down, sources said.