Houston — OxyChem has launched a turnaround at its 1 million mt/year polyvinyl chloride plant along the Houston Ship Channel, further tightening availability of the construction staple, according to sources familiar with the company operations.
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The chemical division of Occidental Petroleum shut its Pasadena, Texas, PVC unit over the weekend of March 27 for planned work expected to last through April. Occidental did not respond to a request for comment.
The shutdown was seen further tightening PVC supply availability. Demand for PVC, which is used to make pipes, window frames, vinyl siding and other products, has been strong since the second half of 2020 amid a housing construction boom fueled by consumers seeking more space while working from home.
Supply though has remained tight as producers maintained reduced upstream chlor-alkali rates for much of 2020 and into 2021 due to weak demand for caustic soda, a byproduct of chlorine production and a key feedstock for alumina and pulp and paper industries. Chlorine is the first link in the PVC production chain.
PVC demand cratered in April 2020 during the height of the pandemic-related shutdowns, and export prices fell to a 12-year low of $520/mt FAS Houston. Domestic PVC prices also fell 8 cents/lb ($176/mt) in April and May at 46-48 cents/lb ($1,014-$1,058/mt), S&P Global Platts data showed.
Export and domestic demand rebounded strongly on the housing boom. Export PVC was last assessed March 24 at $1,795-$1,805/mt FAS. Domestic prices have climbed 28 cents/lb ($617/mt) since June 2020 and were last assessed March 24 at 74-76 cents/lb ($1,631-$1,675/mt). Market sources said another 7 cents/lb ($154/mt) in price increases announced by all US PVC producers for March has been largely accepted, and another 7 cents/lb in price increases are pending for April and May.
Freeze shutdowns delay turnarounds
OxyChem had planned to start the Pasadena turnaround in early March, as had Shintech on one of the three PVC production lines at its 1.45 million mt/year operation in Freeport, Texas. However, they and many other petrochemical producers shut all Texas operations in mid-February when sustained subfreezing temperatures hit the US Gulf Coast, which interrupted their preturnaround stockpiling efforts.
Both companies restarted their plants by early March to resume that stockpiling. The companies wanted to minimize turnaround delays to maintain contractors they had secured to do the work, as contractor demand to conduct repairs surged in the wake of the freeze.
Shintech began its turnaround the week of March 15, according to sources familiar with company operations. Shintech did not respond to a request for comment.
OxyChem may restart its 613,000 upstream ethylene dichloride plant in Convent, Louisiana, in the coming weeks, according to sources familiar with company operations.
The company shut the plant, which operates as a swing facility with output rising or falling as market conditions warrant, when demand for chlorine and downstream products fell sharply nearly a year ago. Like other producers, OxyChem had maintained reduced upstream chlor-alkali rates due to lingering weak caustic soda demand, and held off on restarting the Convent EDC facility despite consistent demand for spot export EDC cargoes.
Market sources have said caustic soda demand was seen ticking up, particularly in the aftermath of freeze-related shutdowns. While those shutdowns likely did not significantly dent what had been seen as long supply, buyers that maintained low inventories were seen slowly restocking, a source noted.
"Demand was continuing to increase month over month, and this event has triggered a little bit higher demand," a source said of the freeze. "It's not necessarily panic buying, but people are looking at inventories, and seeing that something could happen. They had been running skinny inventories."
Spot export EDC availability had been thin for months as integrated producers poured all output into downstream PVC production amid record-high PVC prices. EDC prices that had reached $600/mt FOB USG, an all-time high since Platts began assessing the market in 1996, had largely not enticed producers to make more spot volumes available.