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FACTBOX: Deep freeze prompts force majeures, shutdowns at US Gulf Coast petchem plants

Highlights

Olin: FM declared Feb. 16 on US chlorine, caustic soda, ethylene dichloride, epoxy, hydrochloric acid and other products produced at its Freeport, Texas, complex.

OxyChem: FM declared Feb. 15 on US chlorine, caustic soda, EDC, vinyl chloride monomer and polyvinyl chloride.

LyondellBasell: FM declared Feb. 15 on US polypropylene

INEOS Olefins and Polymers USA: FM declared Feb. 15 on polypropylene

OQ Chemicals: FM declared Feb. 15 on US oxo-alcohols, aldehydes, acids and esters produced at its Bay City, Texas, operations

Houston — Petrochemical producers were shutting down plants and some declared force majeure on products they make as a historic deep freeze enveloped the US Gulf Coast.

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"The real problems are going to start when they start back up," a market source said. "You have to empty the whole system or pipes will burst. It will take at least two weeks for all of them to start up, and that's without problems."

Sources said the freeze, which brought bitter cold to a region where infrastructure is not built for sustained sub-freezing temperatures, was worse than even the most vicious hurricanes, including Harvey which drowned southeast Texas with unprecedented flooding in 2017.

"It's affecting transportation, railroads, trucking – even if you can make the product, you can't get it delivered," another source said. "It's going to have a major impact on all these plants on the Gulf Coast. It's at least as bad as a hurricane and it's more widespread."

Market sources expect prices for polymers and some olefins, which had already reached record highs amid tight supply as producers navigated the coronavirus pandemic, to spike further on the freeze-related disruptions and uncertainty.

Here is a rundown of confirmed fallout from the freeze:

FORCE MAJEURES

SHUTDOWNS

  • Olin: Freeport, Texas complex, with 3 million mt/year of caustic soda capacity. 748,000 mt/year of EDC
  • OxyChem: Ingleside, Texas, 544,000 mt/year cracker; 248,000 mt/year chlor-alkali; 680,000 mt/year EDC; Deer Park and La Porte, Texas, 1.27 million mt in PVC capacity; 1.79 million mt/year of VCM capacity; 580,000 mt/year chlor-alkali
  • Shintech: Freeport, Texas: 1.45 million mt/year PVC
  • Formosa Plastics USA: Entire Point Comfort, Texas, complex, including three crackers with a cumulative capacity of 2.76 million mt/year; 875,000 mt/year of high density polyethylene; 400,000 mt/year of low density PE; 465,000 mt/year of linear low density PE; 798,000 mt/year of PVC; 1 million mt/year of caustic soda and 910,000 mt/year of chlorine; 753,000 mt/year of VCM; 1.478 million mt/year of EDC; and a cumulative 1.17 million mt/year of monoethylene glycol operated by sister company Nan Ya Plastics.
  • ExxonMobil: Baytown, Texas, refining and chemical complex, including three crackers with a combined capacity of 3.8 million mt/year
  • ExxonMobil: Beaumont, Texas, refining and chemical complex, including an 826,000 mt/year cracker; 225,000 mt/year HDPE; 240,000 mt/year LDPE; 1.19 million mt/year LLDPE with some HDPE capacity
  • Dow Chemical: Certain units offline within Dow sites along the US Gulf Coast, but the company did not specify. Dow's Gulf Coast operations include a complex at Freeport, Texas, with three crackers able to produce a combined 3.2 million mt/year, two LDPE units with 552,000 mt/year and 186,000 mt/year HDPE; Dow's Seadrift, Texas, complex includes 490,000 mt/year LLDPE and 390,000 mt/year HDPE
  • TPC Group: Houston site shut down, including 544,310 mt/year butadiene unit, when boilers lost steam
  • Motiva Chemicals: Port Arthur, 635,000 mt/year mixed-feed cracker
  • Shell: Deer Park, Texas, refining and chemical complex, including two crackers with a combined 961,000 mt/year of capacity
  • Shell: Norco, Louisiana, refining and chemical complex, including two crackers with a combined capacity of 1.42 million mt/year
  • Chevron Phillips Chemical: Pasadena, Texas, 998,000 mt/year HDPE

PRICES

  • MTBE prices rose 8.04 cents/gal on the day to 177.07 cents/gal FOB USG in line with front-month RBOB futures
  • Polymer prices held steady amid muted activity

PORTS AND RAILROADS

  • Houston Ship Channel: shut mid-afternoon Feb. 14; late morning Feb. 16 reopened to outbound traffic only, then reopened to inbound as well.
  • Sabine Pass: port shut mid-afternoon Feb. 14, resumed inbound traffic midday Feb. 16
  • Corpus Christi: port shut Feb. 14, resumed boarding vessels Feb. 16
  • Union Pacific advised customers Feb. 15 to expect delays of a minimum of 72 hours on shipments in impacted areas until conditions improve.
  • BNSF Railway advised customers on Feb. 16 that many trains were holding due to widespread power outages and road closures that affected movement of train crews and other personnel, and delays in shipments were expected to last until conditions improve.