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Westlake declares force majeure on chlorine after W. Va. plant failure: letter

Highlights

Customer letter cites sudden processing equipment failure

Shutdown expected to further tighten already tight US chlorine supply

Westlake Chemical has declared force majeure on chlorine production at its 300,000 mt/year chlor-alkali plant in Natrium, West Virginia, according to a customer letter seen June 2 by S&P Global Platts.

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The letter, dated June 1, said its chlor-alkali production at the plant had been "directly and adversely impacted due to the sudden and unanticipated failure of a critical piece of processing equipment," resulting in limited chlorine availability to customers.

The letter also said Westlake could not predict how long the force majeure would remain in effect. The company did not respond to a request for comment.

Westlake also declared force majeure May 18 on membrane-grade caustic soda after a third-party brine pipeline burst that serves the company's Geismar, Louisiana, complex. The pipeline was repaired May 24.

Caustic soda, a key feedstock for alumina and pulp and paper industries, is a byproduct of chlorine production.

Chlorine is the first link in the production chain for construction staple polyvinyl chloride, used to make pipes, window frames, vinyl siding, and other products. It also is a key ingredient for bleach, hydrochloric acid, epoxy, chemicals used to make polyurethane foam, refrigerants, paint, crop protection sprays, medical products, and electronics.

The "chlor" in chlor-alkali refers to chlorine, while the "alkali" refers to caustic soda.

Formosa Plastics USA on May 19 also declared force majeure on chlor-alkali after torrential rain flooded its 736,000 mt/year chlor-alkali unit at its Point Comfort, Texas, complex.

US chlorine supply tight before latest force majeure declarations

US chlorine supply was tight before the latest Formosa and Westlake force majeure events were declared. Olin, the world's largest chlor-alkali producer, has a force majeure declared in mid-February that remains in effect for merchant chlorine, and producers have been selling chlorine on allocation.

In addition, chlorine tablets typically used to treat private pools were in short supply after a fire destroyed one of the few US plants that make them in August 2020. BioLab, a subsidiary of Toronto-based, KIK Custom Products, owned the Lake Charles, Louisiana, plant that caught fire Aug. 27, hours after Hurricane Laura hit that city.

OxyChem and pool products manufacturer Clearon Corp are the only other US manufacturers of chlorine pool tablets, and market sources said they cannot fill the gap left by BioLab's absence. BioLab aims to resume production in 2022.

Market sources said Westlake's latest chlorine force majeure could further squeeze already tight downstream PVC production. Formosa's May 19 chlor-alkali force majeure already shut off feedstock for its downstream PVC output, and force majeure events Formosa and OxyChem declared in mid-February on PVC after a deep freeze prompted widespread weeks-long petrochemical plant shutdowns along the US Gulf Coast remained in effect June 2.

Westlake June 1 lifted its February force majeure on PVC, but it was unclear June 2 what the fallout of its latest chlorine force majeure would be on PVC production. Westlake has a turnaround underway at one of its three chlor-alkali units in Lake Charles, Louisiana, that is slated to wrap up in mid-June, market sources said.