Plastics markets face outages in aftermath of storm

US plastics markets are facing several outages and likely higher prices in the wake of Hurricane Ida, which came ashore near Port Fourchon, Louisiana, yesterday.

Producers of polyethylene (PE), polyvinyl chloride (PVC) and polypropylene (PP) are all facing downtime resulting from widespread power outages throughout Louisiana.

Roughly 39pc of total US PVC capacity is believed to be off line as a result of the storm, including 1.168mn t/yr of combined capacity at Westlake's Geismar and Plaquemine sites; 1.49mn t/yr of combined capacity from Shintech's Addis and Plaquemine sites; and 500,000 t/yr of capacity from Formosa in Baton Rouge. Several upstream vinyl chloride monomer and ethylene dichloride assets were also believed to be down from the storm.

Approximately 9pc of US PP capacity is believed to be off line, including approximately 400,000 t/yr of PP capacity from ExxonMobil in Baton Rouge and approximately 429,000 t/yr of capacity at Pinnacle Polymers Garyville PP plant. Pinnacle Polymers declared force majeure on PP as a result of the storm.

Approximately 18pc of US PE capacity is believed to be off line from the storm, including 1.597mn t/yr at ExxonMobil's Baton Rouge plant; 1.3mn t/yr of capacity at Dow's Plaquemine site and 847,000 t/yr of PE capacity at Dow's Taft site.

Market participants said the Baton Rouge and Plaquemine sites do not appear to have sustained major damage, but are believed to be down because of power outages.

Dow has not provided any updates on operations at the Taft site. Market participants were still awaiting word on any reports of damage to those operations.

In addition to concerns about damage to facilities, market participants expressed concerns about shortages of additives and other necessary chemicals, such as nitrogen, as well as impacts to infrastructure including roads and railroads. Another area of concern is how quickly employees will be able to return to work.

"Power and people issues are probably going to slow how soon anyone can get up to normal operations," said one plastics trader.

The outages come as the plastics markets were just returning to more normal operating levels after extensive outages following the February winter storm that halted production in the US Gulf coast region. The PP market had rebounded, with most major producers back to normal operating levels. The PE and PVC markets had not yet fully returned to pre-storm level production, but were close.

Market participants have said the outages are expected to further support additional price increases in all plastics markets, with all three major plastics groups facing price hikes in August and September.

By Michelle Klump