US PE and PP plants shut on winter storm: Update

Adds Chevron Phillips PE outages in fourth paragraph.

Multiple polyethylene (PE) and polypropylene (PP) producers have shut plant operations as a result of the winter storm affecting much of the US, with several plants declaring force majeure.

A blast of arctic air throughout much of the US resulted in below-freezing temperatures, equipment failures and widespread losses of power yesterday and today as electricity generators struggled to meet demand. Most of the power losses were in Texas, which is home to a large swath of petrochemical production facilities, among other major energy operations.

Supplies for both PE and PP have been exceedingly tight since the beginning of the year amid planned and unplanned outages. The additional outages from the winter storm will keep supplies tight and add further support to prices.

Chevron Phillips Chemical shut down PE units at Texas sites in Cedar Bayou and Pasadena because of extreme freezing weather that resulted in instrument and process issues, according to filings with the Texas Commission on Environmental Quality. The conditions resulted in all units at the Cedar Bayou, Texas, site shutting down, and a sitewide shutdown of the Pasadena plastics plant, according to the filings. The company has approximately 2.8mn t/yr of PE combined at both sites, and an additional 390,000t/yr of PE capacity in Orange, Texas. It was not immediately clear if the output in Orange was impacted.

On top of the outages, Chevron Phillips announced today it is implementing a 7¢/lb price increase effective on 1 March for all PE products, in addition to a 7¢/lb increase announced for February. Buyers protested the move, coming on the heels of all of the outages.

ExxonMobil Chemical informed customers today that several of its operations have lost power and other key utilities impacting its ability to resume full operations at Gulf coast area PE plants, according to a customer letter. ExxonMobil has approximately 3.94mn metric tonnes (t)/yr of PE capacity at sites in Texas, including Beaumont and Mont Belvieu.

LyondellBasell informed customers it has declared force majeure on PP output from its Gulf coast facilities because of the storm. The company said yesterday it is evaluating the impact of the event on production and logistics capabilities and will inform customers later about product allocations. LyondellBasell has approximately 1.086mn t/yr of PP capacity at its plant in Bayport, Texas, and an additional 843,000t/yr of capacity at its Lake Charles, Louisiana, site. It was not immediately clear whether the Lake Charles plants were affected by the storm. The company declined to comment.

LyondellBasell also declared force majeure yesterday on PE output because of winter storm effects on its Gulf coast and Midwest plants. LyondellBasell has approximately 2.3mn t/yr of PE capacity at plants throughout Texas, including at Bayport, La Porte, Matagorda and Victoria. It has an additional 993,000t/yr of capacity at Midwest plants in Morris, Illinois, and Clinton, Iowa.

Ineos Olefins & Polymers also declared force majeure on PP production. Ineos has approximately 586,000 t/yr of PP in Texas at plants in Chocolate Bayou, Texas, and Deer Park, Texas. The company also has PE production, but it was not immediately clear whether there were similar issues at PE sites.

Formosa Plastics yesterday said it has discontinued PE, PP and olefins operations at its Point Comfort, Texas, site as a result of severe weather conditions. The company said major raw material suppliers have also been affected by the weather and logistics partners also expected delays. The company is already operating under force majeure conditions on PE and PP as a result of earlier outages. Formosa Plastics has approximately 917,000 t/yr of PP capacity and 1.8mn t/yr of PE capacity at its Point Comfort, Texas, site.

Flint Hills Resources yesterday declared force majeure on PP. Flint Hills Resources has approximately 344,000 t/yr of PP capacity at its plant in Longview, Texas.

By Michelle Klump