Shintech shuts Texas PVC operations on lack of feedstock: sources

Shintech has shut its 1.45 million mt/year polyvinyl chloride operations in Freeport, Texas, on a lack of upstream vinyl chloride monomer supply, sources familiar with company operations told S&P Global Platts Sept. 7.

The shutdown of the largest PVC plant in the US pushed the amount of US PVC capacity offline to about 58%, according to S&P Global Platts data. About 41% of US PVC capacity was already offline after Hurricane Ida's Aug. 29 assault on Louisiana.

Shintech's Freeport shutdown at the end of the week starting Aug. 30 came after Olin's 835,000 mt/year VCM plant at Freeport shut the same week because of an equipment failure, sources familiar with Olin's operations said. Both issues were unrelated to Ida, which affected Louisiana along the Mississippi River, Mississippi and other states as it moved toward the US Northeast after making landfall.

Olin supplies Shintech with VCM to make PVC, a construction staple used to make pipes, window frames, vinyl siding and other products.

Neither company responded to requests for comment.

Sources said Olin emptied its inventories of VCM for Shintech after shutting its plant, and Shintech had to shut its PVC operations when those flows dried up.

The amount of US PVC capacity offline with Shintech's shutdown mirrors the amount shut when a deep freeze hit the US Gulf Coast and much of the US in mid-February, forcing widespread weeks-long petrochemical shutdowns. The cluster of chlorovinyl operations along the Mississippi River were largely spared from the freeze, which hit Lake Charles, Louisiana and operations throughout Texas.

US export PVC prices rose to $1,800/mt FAS Houston by late March on the freeze-related supply squeeze, an all-time high since Platts began assessing the market in 1983. Export PVC was last assessed Sept. 1 at $1,675/mt FAS, having rebounded from $1,450/mt FAS in mid-July, Platts data showed.

Domestic PVC prices also have surged since mid-2020 on a US housing construction boom fueled by consumers seeking more space while working from home amid the COVID-19 pandemic. Prices have climbed 45.5 cents/lb ($1,003/mt) since June 2020 and were last assessed Sept. 1 at 91.5-93.5 cents/lb ($2,017-$2,061/mt).

Market sources said Shintech's shutdown on top of Ida-related shutdowns in Louisiana would further squeeze availability that has been tight throughout 2021, likely further boosting prices.

"PVC situation is getting more serious than we thought if Shintech is out of the game," a source said.

Formosa Plastics USA's Baton Rouge operations, which include a 513,000 mt/year PVC plant, were partially restarted post-Ida on Sept. 7, awaiting full restoration of normal industrial gas feedstock supply, according to sources familiar with company operations. Formosa declared force majeure Sept. 5 on PVC in light of reduced output after the storm's assault, according to a customer letter seen Sept. 7 by Platts.

Formosa did not respond to a request for comment.