LyondellBasell declares force majeure on polymer shipments to Canada amid rail disputes

LyondellBasell has declared force majeure for all polymer rail shipments to Canadian locations effective Aug. 22, the same day Canada's two main freight railways shut down over a labor dispute, according to a letter to customers seen by S&P Global Commodity Insights.

The dispute, affecting Canadian Pacific Kansas City and the Canadian National Railway, resulted in a labor stoppage effective 12:01 am Aug. 22, the impacts of which are still being determined, according to the Aug. 22-dated letter.

However, Canadian Pacific stated late Aug. 22 that it is preparing to restart railway operations in Canada following federal government intervention, effectively calling off the strike.

A LyondellBasell representative did not immediately respond to a request for comment. It is unclear how long the force majeure might remain in effect.

"In view of the railway embargoes already implemented and the labor stoppage, LYB expects impacts to its ability to deliver polymer products," the letter said. "This labor disturbance and resulting inability to obtain – or delays in – transportation are issues that prevent LYB's ability to perform and are beyond our reasonable control."

The company produces a total 1.365 million mt/year of polypropylene and 3.149 million mt/year of polyethylene between eight US facilities, according to S&P Global Commodity Insights data. More than 60% of the PE capacity is high density PE.

Over the course of Aug. 21-22, the shutdown impacted pricing for metals, agriculture and oil and gas among other commodities, Commodity Insights reported.

Embargoes in effect

Canadian Pacific and Canadian National each issued rail embargoes with "spontaneous labor action" as the cause on Aug. 17 and 19, respectively, with Canadian Pacific's embargo going into effect Aug. 20 and Canadian National's on Aug. 22, according to the Association of American Railroads embargo website.

Canadian Pacific's rail embargo has not been amended or cancelled as of 7:30 pm EST Aug. 22.

Other major North American rail companies, including CSX, BNSF, Union Pacific and Norfolk Southern, had not issued embargoes directly related to the labor action as of the evening of Aug. 22, per the AAR website. The Canadian National and Canadian Pacific embargoes listed CSX and BNSF as invited participants.

The embargoes, both of which expire a year from the issuing date, include all empty cars, meaning US railroads are unable to bring empty cars back into Canada.