Frosty Weather Has Shut Down Many Polyolefin Plants In The United States
The results so far indicate that the U.S. Gulf of Mexico petrochemical industry has been severely affected, ICIS said. About 65 percent of ethylene capacity and nearly half of propylene supply in the United States were disrupted, and more than 83 percent of the energy produced by polypropylene (PP) was lost.
Ethylene shutdowns amounted to 25.5 million tons, or 65 percent of the U.S. total; 46% of propylene capacity is also offline, about 9.9 million tons; Production at many refineries in the region has also been reduced, with more than 2 million barrels of refining capacity shut down in the United States per day.
In percentage terms, the most severely affected major commodities are epichlorohydrin (ECH)(100% of total U.S. capacity), toluene diisocyanate (TDI)(100%) ethylene glycol (EG)(89%), polypropylene (PP)(83%), styrene butadiene rubber (SBR)(71%), ethylene (65%), epoxy resins (62%), ethylene oxide (EO)(55%), and propylene oxide (49%).
Propylene and PP are likely to be among the hardest hit industries in this storm, and the closures will have a knock-on effect on the supply of propylene and PP, which will cause prices to soar. With U.S. PP production capacity so highly concentrated along the Gulf Coast, even a temporary constraint on production capacity would have a huge impact on an already tight market. In addition, with nearly two-thirds of U.S. ethylene production offline, the global PE market is likely to tighten further.
Propylene and ethylene prices have hit record highs as a result of widespread plant shutdowns, with multiple cracker units and three propane dehydrogenation units all shut down. Derivative polymer prices have not been significantly affected. But sources expect polyethylene, polypropylene and polyvinyl chloride prices, which are already high, to rise further as plant shutdowns result in a sharp tightening of supplies already tight before the frost.
Due to the continued improvement of the economy, the gradual spread of vaccines, and the shutdown of many types of chemical plants due to the cold weather in the United States, the strong price rise in the chemical market is expected to continue under the imbalance between supply and demand.