Chemicals market players, national trade association react to US port strike

A strike at US East and Gulf Coast ports will disrupt chemical manufacturing and harm supply chains, the American Chemistry Council said Oct. 1, with sentiment varied among chemicals market participants as to the scale of the impact.

Workers at East and Gulf Coast ports went on strike just after midnight Oct. 1, the first by the International Longshoremen’s Association at East and Gulf coast ports since 1977.

The ports impacted by the strike account for about 90% of the waterborne chemical shipments that move in and out of the US, according to the ACC. About 138 million tons of chemicals were transported through the ports in the Gulf Coast and about 31 million tons of chemicals were transported through the East Coast ports in 2022. These chemical shipments were worth over $100 billion in 2022, according to the ACC.

“Shutting down the ports along the East and Gulf Coasts will result in a major disruption of chemical imports and exports, which in turn will hurt the broader economy both here and abroad," Jahn said. "We urge the White House to do everything possible to prevent this major shockwave from rippling through the American supply chain and hurting US trade by working with both parties to resume contract negations.”

ACC said the top US ports by total chemicals traffic are Houston, followed in order by Port of South Louisiana, New Orleans, Port of Greater Baton Rouge and New York/New Jersey.

Imports and exports of chemicals products have been concentrated mainly among five ports on the East and Gulf coasts in 2023 and January-July 2024, according to US International Trade Commission figures. Of these, the Houston-Galveston port was the top export port for more than a dozen chemicals or chemical groups in 2023 and January-July 2024.

Houston-Galveston is a top export port for acetic acid, acrylonitrile, isocyanates, vinyl acetate monomer, mixed xylenes, toluene, caustic soda, ethylene dichloride, vinyl chloride monomer, ethanolamines, ethylene, propylene, polyethylene and polypropylene, according to the ITC.

Market reactions varied

Inventory buildups were among the top concerns noted by polymer market players on Oct. 1, considering there will only be so much of an outlet for resin in the domestic US market. Any excess buildup of stocks could pressurize domestic prices, according to market feedback.

A lack of market activity was observed on Oct. 1, even at the start of a new month, with producers not making moves to incentivize buyers in light of the uncertain logistics. In South America, traders interrupted negotiations of US-origin products due the uncertainty regarding delivery.

For each day the strike goes on, five days of shipping-related delays are anticipated, sources said.

“I will not buy material," one Brazilian polymer trader said. "I am already worried about the loads that were sold and cannot be shipped. Soon customers will start canceling. This whole thing will become chaos."

Traders and distributors are also wary of any surcharges being applied to cargoes, with customers not willing to absorb that cost. Container spot rates have not reflected the changing conditions, as sources expected that frontloading of cargo during the early peak season of May-July covered most of the holiday cargo.

Liquid chemicals markets were less affected, sources said. Chlor-alkali market participants reported no impacts to vessels used to transport gas/liquid chemicals, with impacts only reported to container operations.

"Our oil, gas, petchem markets don't seem to be too worried about this strike, it seems to me," a second source said.

Still, an acrylonitrile market source said on Oct. 1 that the strike could be a market disruptor, even with demand for US-origin acrylonitrile talked low, as deliveries are interrupted.

“If this strike lasts long, companies with already high inventories cannot build up indefinitely,” the third source said.

Warehouses by the ILA ports will continue to take rail cars in from producers "maybe for another one week tops," a fourth source said. After this time, he added, "if there's still no lights of strike negotiation, everything is going to stop completely."