Already tight resin markets will be further tightened by freezing temperatures that have knocked out power across Texas.
It may take several days to determine just how much the storms and power outages have hit resin companies in the region. More than 200,000 homes and businesses were without power late Feb. 18 in Texas, according to a USA Today report.
That number had been as high as 4 million on Feb. 16, when temperatures dipped into the single digits overnight. Frigid temperatures have resulted in almost 60 deaths in Texas and other states.
Much of east Texas — including the Gulf Coast, where much resin production is located — was hit by snow and ice earlier in the week. Bitter cold across the state led to some power companies being unable to produce electricity from coal, natural gas and wind due to freezing temperatures.
Houston-area temperatures were expected to drop to just below freezing again to close out the week, according to the National Weather Service, but improve to lows in the 40s from Feb. 20-22.
"It's probably going to be Monday [Feb. 22] until we really know where we stand," one resin company executive told Plastics News.
Most production of resin and related materials was down early Feb. 19, with several producers declaring force majeure or otherwise limiting sales through allocations. On Feb. 18, research firm ICIS of Houston estimated that almost 90 percent of U.S. polypropylene resin production was offline. The firm also placed outages for linear low density polyethylene at 54 percent, LDPE at 51 percent, high density PE at 42 percent and PVC at 16 percent.
In feedstocks, ICIS estimated 65 percent of U.S. ethylene production was down, as well as almost 50 percent of propylene and 23 percent of vinyl chloride monomer. "At present, authorities have not been able to give a timeline for full power to be restored to the state power system," ICIS said in a Feb. 18 report.
"Several facilities have co-generation on-site but there are the larger macro issues," said Chip Swearngan, director of corporate communications and government relations for Houston-based Westlake Chemical Corp., in a phone interview. "Gas pipelines and the feedstocks have been impacted. There are limits on the supply of ethane and other feedstocks coming into the facilities."
Westlake has about 500 employees in the Houston area and another 1,000 staffing a handful of facilities across the state border in Lake Charles, La.
"The uncertain timeline for power to be restored to the state and the time necessary to bring production units back online and ramp up output means that supplies could be constrained in the country for weeks," the ICIS report added.
The regional PP market is facing unprecedented shortages. Supplies already were tight before the Texas ice storm because of limited supplies of propylene. Price hikes of 20-30 cents per pound or more were possible for February for both PP resin and propylene even before the storm.
"We're hearing that some of these [PP] plants could be up and running by the end of next week, but some of these shortages could last another two months," said Marc Fern, executive vice president with resin distributor M. Holland Co. in Northbrook, Ill.
Fern added that the lack of available PP resin could lead some processors to close plants or production lines temporarily if they can't get enough material. "Without propylene, [resin makers] can't make resin, and converters can't make their products," he said.
PE supplies also are expected to tighten. On a Plastics News webinar Feb. 16, market analyst Mike Burns of Resin Technology Inc. said that "there are a lot of gray areas, but it's not looking positive right now." He added that the Texas weather impact has solidified a 7-cent increase that PE makers were seeking for February. Another 7-cent PE hike is on the table for March.
PP makers that have declared force majeure include LyondellBasell Industries, Ineos Olefins & Polymers and Flint Hills Resources, according to letters obtained by PN. Celanese Corp. also has declared force majeure on acetal resins.
ExxonMobil Chemical has closed its Beaumont and Baytown plants in Texas because of freezing weather conditions, coupled with the curtailment of natural gas supplies throughout Texas, a company spokesman said in an email to PN.
ExxonMobil makes polyethylene resin and ethylene feedstock at both locations. It also makes polypropylene resin in Baytown and propylene feedstock in Beaumont.