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Hurricane shutdowns include 29% of US ethylene, 14% of PGP

August 28/2020

MOSCOW (MRC) -- Most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border Wednesday night or early Thursday, reported Chemweek with reference to a bulletin issued this afternoon by IHS Markit.

Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.

About 10% of US ethylene capacity was already offline before the hurricane formed, and an additional 29% is being shut down. The units include those of BASF/Total at Port Arthur; CPChem at Port Arthur; Dow at Orange, Texas; ExxonMobil at Beaumont; FPC at Point Comfort, Texas; Indorama at Westlake, Louisiana, and Port Neches, Texas; Ineos at Chocolate Bayou, Texas; LACC at Lake Charles; Motiva at Port Arthur; Sasol at Westlake, Louisiana; and Westlake at Sulphur, Louisiana.

"Ethylene inventories were hovering above 5-years average before this event. So, while supply may be reduced in the short-term given the amount of capacity now offline, with several derivatives plants also shut down, the balance should be manageable," says IHS Markit. "Of course, this will ultimately depend on the severity of the hurricane and post hurricane safety inspections."

A host of associated derivative capacity is also being shut down, including 46% of US high-density polyethylene (HDPE) capacity, 31% of US linear low-density polyethylene (LLDPE) capacity, and 29% of US low density polyethylene (LDPE) capacity.

About 14% of polymer-grade propylene (PGP) and 16% of refinery-grade propylene (RGP) is also being taken offline.

"Propylene inventories have trended downward since beginning of July due to planned/unplanned outages from all sources, and the hurricane impact will further erode inventory to closer to the five-year average levels," says the report.

Downstream, 40% of US polypropylene (PP) capacity is being shut down.

Polyolefin units west of landfall could begin restarting as early as Friday, but rail logistics for shipment that typically go through New Orleans for interchange to East Coast destinations will be a problem, and the ports of both Houston and New Orleans are closed, delaying export, says IHS Markit.

"Both PE and PP inventories were at low inventory levels before the storm, so Hurricane Laura is expected to put further pressure on market supply through the near term," the bulletin notes. "Already one resin producer has declared force majeure for PE and PP products as a result of the hurricane."

About 28% of US ethylene oxide (EO) and 34% of US ethylene glycol (EG) capacity is being shut down. "The likely impact will be less EG available for export to Europe and Asia," says IHS Markit. "We may also see a reduction high-purity EO production while glycol rates are maximized to meet post-storm demand."

Two methanol plants in Beaumont, Texas, operated by OCI Beaumont and Natgasoline, respectively, are believed to be shut down. Units near Houston, Texas, and most derivative producers in the region are believed to remain online.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and PP.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, homopolymer PP, propylene, LDPE, HDPE, ethylene, BASF, Dow, Exxon Mobil, Indorama Ventures PLC, Motiva Enterprises, Sasol, Total Petrochemicals, Westlake Chemical, Russia, USA.
Category:General News
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