Some production of resin and feedstocks is returning to Texas and other parts of the Gulf Coast, but tight supplies and high prices are likely to continue at least through the first half of the year.
In the wake of Winter Storm Uri, which hit the region in mid-February, many material suppliers continue to have customers on force majeure sales limits or other types of allocation. Market sources contacted by Plastics News said that supplies of many commodity plastics are limited, if available at all.
Some plastics processors throughout the U.S. already have made production cuts, while others are concerned they might need to in the next few weeks. Automakers including Honda and Toyota already have made production cuts because of supply chain issues including foam for seating and microchips in a separate shortage issue.
In a March 18 email, a spokeswoman for resin maker Dow Inc. said that all crackers on Dow's U.S. Gulf Coast are operational except Sabine River, which will restart this month.
"We expect all assets impacted by the winter storm to continue to ramp through the end of March and into April as we manage a few raw material constraints and freeze damage is repaired," she added. "In general, we expect our Texas assets to be at 80 percent rates by end of the month and full rates in April, which will enable us to begin to fulfill the backlog of demand."
At resin maker LyondellBasell Industries, Media Relations Manager Chevalier Gray said in an email that the firm's U.S. Gulf Coast manufacturing facilities "are finalizing storm-related repairs and have initiated the restart of some of our operations."
A March 18 Bloomberg News article quoted LyondellBasell CEO Bob Patel at an industry conference saying that "today, we don't have enough volume to even meet the needs of the domestic customers" and that he thinks that "it will be well into the fourth quarter before we see conditions back to normal."
Patel added that two of LyondellBasell's ethane crackers in Texas are back up and running, but a third in Corpus Christi will only start up in another three weeks, according to the article. He also was quoted saying that he estimates U.S. polyethylene resin production will be down 12 percent for full-year 2021.
North American prices for commodity resins — including PE, polypropylene and PVC — are expected to be up again in March, although final amounts remain unsettled. PP prices in the region are up an eye-popping 61 cents per pound since December as a result of strong demand and tight supplies of propylene feedstock.
Since January, PE prices are up a net of 32 cents, with suspension PVC up 22.5 cents and solid polystyrene up 19 cents. PET bottle resin prices are up 6 cents since Jan. 1. Prices for most of these materials are believed to be at all-time highs.
During the recent online Plastics News Executive Forum, PE market analyst Mike Burns estimated that 60 percent of Gulf Coast PE production and 80 percent of production of ethylene production is back online.
Burns, who is with Resin Technology Inc. in Fort Worth, Texas, added that the U.S. PE market has lost 1 billion pounds of inventory since January and that some PE lots are being sold in online auctions at prices well above contact prices.