Resin makers still assessing impact of Hurricane Ida

As resin makers look to recover from the impact of Hurricane Ida, some materials may be affected more than others.

North American markets for PVC and polystyrene resins are likely to be impacted more by potential higher prices than markets for polyethylene and polypropylene resins, according to market watchers contacted by Plastics News.

The storm made landfall on the Louisiana coast near New Orleans on Aug. 29 and made its way across the southern U.S. before bringing heavy rains to parts of the mid-Atlantic through Sept. 2. In Louisiana, the storm brought maximum sustained winds of 150 mph.

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.

Rail car and truck deliveries from plants in the region could be delayed by a week or more, one U.S.-based resin buyer said.

Most resin companies contacted said they did not sustain direct damage, although many were still assessing damage and working on restart dates as of Sept. 3.

In a Sept. 1 statement, officials with Dow Inc. in Midland, Mich., said that initial assessments show no major damage to the firm's production facilities throughout Louisiana. Dow operates multiple sites in Louisiana making polyethylene and other materials.

In Plaquemine, Dow officials "continue to assess our operations and, contingent on third-party utilities supply restoration, expect to begin bringing operations back online next week."

"We intend to prioritize startups based on utility balances and raw materials availability," they added.

In Taft — part of St. Charles Parish — Dow officials said that because of a lack of functioning infrastructure, it's too soon to predict operations startup timing.

"We are partnering with stakeholders throughout the region to understand both immediate- and longer-term needs to help address critical infrastructure challenges," officials added. "In the near term, we expect product and supply chain impacts across the industry to further tighten already constrained supply balances in our key value chains."
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."

ExxonMobil also has placed all PP products on sales allocation, according to market sources.
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 [is] unknown at this point."

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."

Other facilities also have weathered the storm. Heritage Plastics "is up and running" at its compounding plant in Picayune, Miss., a spokesman said. The area had been under a flood watch earlier in the week. Sources said that JM Eagle had restarted a PVC pipe plant in Batchelor, La., that had been closed in advance of the storm.

Entergy, the company supplying electricity to much of the area affected by Ida, said that about 725,000 customers remained without power early Sept. 3. The number of customer outages previously had peaked at 950,000.

"We expect recovery to be difficult and challenging, and customers in the hardest-hit areas should expect extended power outages lasting for weeks," officials said in an update.

A transmission tower that withstood Hurricane Katrina 16 years ago fell during Ida, part of it falling in the Mississippi River, the company said. Other damages include more than 14,000 damaged or destroyed poles, more than 2,000 damaged or destroyed transformers and 155 destroyed transmission structures.
In an email to PN, 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. Resin Technology Inc., a 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. Westlake has placed force majeure sales limits on PVC and related products.

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.

Based on market shares, the storm's impact on PVC and PS is larger, according to PetroChem Wire, a consulting firm in Houston. About 40 percent of U.S. PVC and 25 percent of North American PS was down because of the storm, as compared with 14 percent of North American PE and 11 percent of the region's PP capacity, PCW said.

For ethylene feedstock used to make PE and PVC, 18 percent of U.S. capacity was out, as well as 44 percent of U.S. styrene monomer, which is used to make PS and other resins.
As a result, resin prices that buyers had hoped to see decreasing after 18 months of steady increases could be flat or 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."

The hurricane impact could be "a pause, not a setback" for North American PE buyers, according to RTI market analyst Mike Burns.

A U.S.-based PE buyer told PN that the storm might not have as much of an impact on a 5-cent hike that producers already had proposed for September. "Producers build these plants with hurricanes in mind," the buyer said. "They've become really good at battening down the hatches when a storm approaches."
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.

Market sources said that tight PVC supplies likely will allow a proposed 2-cent increase to take hold in September. Higher PS prices also are possible, they added.

The PP market remains unpredictable for September. Spot prices for polymer grade propylene actually have declined in the last week, indicating that PP resin prices could be lower for the month.
Low availability of nitrogen needed to restart resin plants might slow down production schedules, sources said. Nitrogen is used to purge reactor tanks of oxygen at some facilities.