Resin suppliers are facing some harsh realities in the wake of Winter Storm Uri, which hit Texas in mid-February.
The storm affected the production of almost every resin and feedstock made on the Texas Gulf Coast. Electricity and natural gas were knocked out at some sites for 48 hours or more. And even though many are up and running now, getting back to pre-storm production may take longer than expected, according to market sources interviewed by Plastics News.
These conditions are expected to make it difficult for resin buyers to source many resins, possibly through the first half of 2021. A resin distributor in the southern U.S. told PN that his firm was offered 10 truckloads of polypropylene resin last week, but before they could buy them, a compounding firm bought the material for a higher price.
"We're hearing you can only get spot material if you're willing to pay 50 percent more," he said. "This isn't going to get better overnight."
ExxonMobil Chemical has begun restarting activities in Beaumont, Texas, and is preparing to restart at Baytown, a company spokesman told PN. The firm "is working to reestablish normal operations and replenish fuel supplies as safely and quickly as possible following the extreme weather in Texas," he said.
ExxonMobil had closed those locations in advance of the cold weather. The firm makes polyethylene resin and ethylene feedstock at both sites, as well as PP resin in Baytown and propylene feedstock in Beaumont.
A spokesman for resin maker Dow Inc. of Midland, Mich., said in a March 4 email that although it's too early for Dow to estimate potential impact on its businesses, officials in the near-term "expect the product and supply chain impacts across the industry to create very tight supply balances across our key value chains."
"We are prioritizing startups for impacted operations based on raw material availability and utility balances," the spokesman added.
Chevalier Gray, media relations manager with LyondellBasell Industries in Houston, said in an email that power has been restored to the firm's U.S. Gulf Coast asset locations and personnel are performing storm-related repairs.
"When repairs are complete and raw materials and utilities become available, we will safely resume operations," she said.
On a Feb. 23 conference call with analysts, Albert Chao, president and CEO of Houston-based resin maker Westlake Chemical Corp., commented on post-ice challenges that his firm could be facing.
"With a hard crash hurricane, you know it's coming, you prepare and you shut [plants] down orderly," he said. "But with a freeze, sometimes you're caught off guard, your boilers get tripped and you're out of steam and the plants come crashing down."