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August 30, 2021 03:42 PM

Resin markets may feel wrath of Ida while recovering from past weather blasts

Frank Esposito
Senior Staff Reporter
Plastics News Staff
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    Petty Officer 3rd Class Carlos Galarza U.S. Coast Guard District 8
    The U.S. Coast Guard flies over Galliano, La., to survey damage from Hurricane Ida.

    North American resin markets will be affected by the impact of Hurricane Ida, a major storm that hit Louisiana on Aug. 29.

    The storm made landfall around 1 p.m. EST, bringing with it heavy rains and maximum sustained winds of 150 mph. The hurricane had been downgraded to a tropical storm but continued to move north as of Aug. 30.

    The Gulf Coast of Louisiana is home to many plants making plastic resins, as well as feedstocks needed to make those materials. Most of those plants began to close Aug. 28 in advance of the storm. As of mid-day Aug. 30, no major damage had been reported from any plastics or petrochemicals plants in the region.

    But no firms had released a timetable for a potential restart. Electrical power remains out throughout the region, with almost 1 million people without power. Many roads and rail lines also can't be used because of high water levels.

    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. That production is operated by Dow Inc. in Taft and Plaquemine and by ExxonMobil Chemical in Baton Rouge.

    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 & 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."

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