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August 31, 2021 03:32 PM

One resin firm limits sales as firms recover from Ida

Frank Esposito
Senior Staff Reporter
Plastics News Staff
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    Louisiana National Guard
    A Louisiana National Guard truck makes its way through flooded streets south of New Orleans after Hurricane Ida passed through the region.

    At least one supplier is limiting sales of polypropylene resin made made at its Louisiana plant while other suppliers are taking stock of damage and assessing when to restart operations after Hurricane Ida passed through the Gulf Coast.

    The storm that made landfall on the Louisiana coast near New Orleans on Aug. 29 is now making its way across the southern U.S. and is expected to bring heavy rains to parts of the mid-Atlantic through Sept. 2, according to the National Weather Service.

    The Gulf Coast of Louisiana is home to many plants making plastic resins, as well as feedstocks needed to make those materials. In addition, damage to electric systems and other utilities and damaged roads and bridges are expected to complicate recovery.

    So far, though, most resin companies contacted said they did not sustain direct damage.

    Pinnacle Polymers declared force majeure for PP made at its plant in Garyville, La., just outside of New Orleans. The Garyville plant has annual PP production capacity of almost 950 million pounds.
    In an email, Marketing Vice President Lester Burton said that because of anticipated high winds, the plant shut down ahead of the storm on Aug. 28.
    "I believe the eye of the storm passed over the plant," he said. "We are currently assessing. I expect that the only impediment to restart will be the resumption of power, utilities and services. Timeline unknown at this point."

    The storm brought heavy rains and maximum sustained winds of 150 mph.
    No firms that had to shut down due to Ida have released a timetable for a potential restart.

    In an Aug. 30 statement, officials with Dow Inc. in Midland, Mich., said that the firm "has begun initial site assessments and expect those efforts to ramp as additional colleagues are able to return to our Louisiana sites." Dow operates multiple sites in Louisiana making polyethylene and other materials.

    A spokesman for ExxonMobil Chemical in Houston said Aug. 30 that staff at the firm's production site in Baton Rouge "worked safely to maintain operation at reduced rates, to stabilize equipment and to minimize emissions throughout the storm."

    "Our facilities did not sustain any significant damage during the storm," he added. "Once we confirm we have access to needed feedstocks and stable systems, we will begin the process of returning to normal operations."

    Total Petrochemicals of Houston operates a polystyrene resin plant in Carville, La. A spokesperson said Aug. 30 that the firm "has accounted for all persons who were at our Carville plant during Hurricane Ida. ... We are also contacting all our employees who either stayed home or evacuated the area to assess their needs."

    Entergy, the company supplying electricity to much of the area affected by Ida, said that 850,000 customers remained without power as of midday Aug. 31.

    "Ida's historic intensity has brought a tremendous amount of damage across Louisiana and Mississippi," Entergy said in an update on its website. "Because of the extent of damage and rebuilding required, we expect recovery to be difficult and challenging, and customers in the hardest-hit areas should expect extended power outages lasting for weeks."

    A transmission tower that withstood Hurricane Katrina 16 years ago fell during Ida, part of it falling in the Mississippi River, the company said.

    In an email to Plastics News, market analyst Phil Karig said that producers in Louisiana were aided by having several days to prepare for the hurricane, unlike the ice storm that hit Texas in February.

    "The big issue is that the Gulf Coast petrochemical complex is interdependent in ways that may not become clear for at least several days," said Karig, managing director of Mathelin Bay Associates in St. Louis.

    Chemical markets "are especially vulnerable to disruptions" because they've sustained more than a year's worth of interruptions from COVID-19 to the hurricanes of 2020 and a winter storm in Texas, added Al Greenwood, a market analyst with research firm ICIS in Houston.

    Already tight resin markets could see further tightness and higher prices because of hurricane impacts. The Resin Technology Inc. consulting firm in Fort Worth, Texas, estimated that 10.3 billion pounds of annual PE production has been shut down.

    RTI also estimated that 7.4 billion pounds of annual PVC resin production operated by Shintech Inc. in Plaquemine and Addis, Formosa Plastics Corp. USA in Baton Rouge and Westlake Chemical Corp. in Plaquemine and Geismar also are shut down.

    The region also is home to several polystyrene production sites, as well as sites making elastomers, polyurethane feedstocks and other materials. Refineries that make propylene monomer as a byproduct of gasoline production also are in the area. Some of that propylene then is used to make polypropylene resin.

    As a result, resin prices that buyers had hoped to see leveling out after 18 months of steady increases could be heading up again — an unwelcome event for plastics processors throughout North America.

    For PE and PP, prices will likely remain at all-time high levels for September, according to Esteban Sagel, principal with Chemical and Polymer Market Consultants in Houston. He added that if processors can find container space, "it may be a good idea to consider bringing material from overseas."

    In an email, ICIS North America Head Jeremy Pafford said that the largest impact from Ida could be in the chlor-alkali chain — including PVC resin — since the region is home to almost 40 percent of North American PVC capacity.
    "It's not hard to envision a much tighter supply picture — and higher prices — for [PVC and chlorine] as well as caustic soda," Pafford added.

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