Resin plants trying to restart after Ida

Some resin assets are restarting in the wake of Hurricane Ida, but many remain down nearly two weeks after the storm hit Louisiana.

The PVC resin market in particular remains hard hit, with plants operated by Shintech Inc., Westlake Chemicals Corp. and Formosa Plastics Corp. USA all down. A feedstock shortage also has led Shintech to idle a massive plant in Freeport, Texas. Combined production challenges in Louisiana and Texas have resulted in almost 60 percent of U.S. PVC production out of action as of Sept. 10.

Sources said that Shintech was in the early stages of restarting PVC operations in Addis and Plaquemine, La., and that Formosa was doing the same in Baton Rouge. Houston-based Westlake has declared force majeure sales limits for PVC, vinyl chloride monomer and related products made at sites in Geismar and Plaquemine.

The PVC outages could lead to higher prices for PVC and related products both in the U.S. and globally, since a sizable amount of U.S. PVC is exported, according to Jeremy Pafford, North America head with data firm ICIS of Houston.

Sources previously said that the Louisiana closings made it likely that a 2-cent PVC price hike that had been nominated by producers for September would be successful. The impacts of the COVID-19 pandemic, two hurricanes in the second half of 2020 and an ice storm that hit Texas in February already have moved regional PVC prices up 24.5 cents so far in 2021 and a net of 40 cents since January 2020.

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 and New York. In Louisiana, the storm brought maximum sustained winds of 150 mph. The storm is blamed for at least 82 deaths.

Market sources said that DAK Americas has declared force majeure for PET resin made at its plant in Bay St. Louis, Miss. Pinnacle Polymers also has declared force majeure on polypropylene resins in Garyville, La., and Cornerstone Chemical Co. has done the same for melamine resin made in Waggaman, La.

In Plaquemine, Dow Inc. has begun bringing operations back online as third-party utility balances and raw materials availability allow, officials said in a Sept. 8 statement. Midland, Mich.-based Dow makes polyethylene resin, ethylene, propylene, benzene and other products there. Officials added that the firm will continue to prioritize startups based on third-party utility balances and raw materials availability.

In Taft, La., where Dow's products include linear low density PE, ethylene and propylene, officials said the firm "is making progress toward restart of operations."

ExxonMobil Chemical also is restarting its Baton Rouge complex that makes PE, PP, ethylene, propylene, benzene, plasticizers and other products. The firm was able to keep operating the site at reduced rates through the hurricane.

Officials with Nova Chemicals in Calgary, Alberta, said in a Sept. 10 email that the firm's plant making ethylene and propylene in Geismar "is expected to restart in the coming week." Lion Copolymer also is restarting a plant making EPDM materials in Geismar, sources said.

Dow, ExxonMobil and Nova each have made donations to help with hurricane relief efforts. Dow has donated $2 million to support immediate relief and long-term recovery efforts tied to the storm and its aftermath. This support includes assistance for the firm's impacted employees. Dow is collaborating with local parish, regional and national partners providing critical services to those immediately affected by the storm.

"Our primary focus right now is the safety of our colleagues, our operations and our communities, and Team Dow is working closely with our partners and stakeholders to help with both the immediate and longer-term impacts of the storm," Chairman and CEO Jim Fitterling said in a news release.

Nova has pledged more than $100,000 in support of the region's recovery efforts. That commitment includes direct donations to the American Red Cross and the Capital Area United Way, along with local outreach and an employee relief fund to assist with immediate needs and essential items.

"Louisiana is the backbone of the petrochemical industry in the United States, and we are grateful that our employees in Geismar are safe and accounted for," President and CEO Luis Sierra said. "We are committed to working with our local community to begin the process of healing and rebuilding."

ExxonMobil is contributing $500,000 toward relief efforts. The firm's assistance will support local nonprofit organizations through direct grants and the donation of gasoline and diesel from its Baton Rouge refinery to front-line health care workers and the local school system, officials said.

Entergy Corp., the company supplying electricity to much of the area affected by Ida, said Sept. 9 that it still was working to restore power to some customers in Louisiana and Mississippi. At its peak outage level, almost 1 million people in the region were without power. The utility reported more than 14,000 damaged or destroyed poles, more than 2,000 damaged or destroyed transformers and 155 destroyed transmission structures.

Outside of PVC, market sources said that polystyrene likely will be the commodity resin most affected by the Louisiana outages. TotalEnergies Petrochemicals & Refining's massive PS plant in Carville remains down. That plant has 1.4 billion pounds of annual capacity — representing 25 percent of U.S. capacity — and is described by the firm as the world's largest PS and styrene monomer site.

Styrene plants operated by Americas Styrenics LLC in St. James and by Cosmar Co. in Carville also remain down. These outages could lead to higher North American PS prices, which have been on a roller coaster in recent months. Prices for the material were up 8 cents in August after sliding a total of 18 cents in June and July. Benzene feedstock, used to make styrene monomer, has been a major cost driver for PS, but the Louisiana outages now could play a role as well.

Market sources said that North American PE and PP resin markets might not see much impact from the Louisiana closings. The amount of those materials down represented only about 10-15 percent of U.S. capacity.

The PE market had built up large inventories in July, as producers recovered from the February ice storm. Sources said that inventory played a role in buyers being able to hold off a 5-cent increase that was attempted in August. Producers now are seeking a similar 5 cents for September. Most PE prices are up 43 cents so far in 2021 and 63 cents since January 2020.

"We're seeing more spot offers," a major U.S. PE and PP buyer told Plastics News. "The inventory build and some scheduled turnarounds made a cushion in the market."

Regional PP markets also have been affected by higher inventories, as well as by some processors' ability to import that material in spite of long lead times and increased shipping costs. And although several propylene monomer sites were affected by the hurricane, sources said that spot prices for polymer-grade propylene (PGP) were down more than 10 cents in early September, indicating that PP resin prices for the month could be down as well.

In August, North American PP prices were up 11 cents per pound, matching an increase seen in PGP. Regional PP makers were unable to add 5 cents in margin improvement onto August prices. PP makers had tried to do the same thing in July, but prices only matched the 2-cent increase seen for PGP. Factoring in previous increases and decreases, PP prices are up a net of 79.5 cents since December.