Current Affairs
September 27, 2021
Supply Chain Blues
Why are supply chains so messed up?
Craig Fuller, CEO at FreightWaves Follow on Twitter Saturday, September 25, 2021 4 minutes read
This is the question that I am asked on a daily basis. The issue is very complex, so I usually quip with a surprising response, “They’ve always had issues, but no one was really paying attention.” Turns out, unless the person works in freight, they are very unsatisfied with this answer. After all, freight and products just seemed to automatically show up before, but that is no longer the case.
Anyone that has been around supply chains knows that there have always been issues and challenges. Weather, economic cycles, capacity, pricing fluctuations, labor strikes, war, terrorism, policy changes, etc. -– have been with us since trade first began and those issues (and others) have always been a part of managing cargo flows. But 2021 is something much bigger entirely. Why is that?
The simple answer is there is a sudden and massive surge of demand that far outweighs the market’s capacity. The global supply chain infrastructure that exists simply can’t handle the volume of products flowing through the economy. The root cause can be blamed on the extraordinary government stimulus that has stimulated demand.
As the money flowed from the government, it ended up in the hands of consumers and businesses that spent it. The transfer of money coincided with a shift in consumer demand from purchasing services to purchasing physical products. This caused the United States to race through trillions of dollars of inventory while domestic and global production was shut down.
Simply stated, production was shut down while the U.S. economy went into demand overdrive. As production came back online, the manufacturing sector responded by fulfilling an unprecedented backlog of orders.
China ramped up manufacturing and products started to flow again. And the volumes were much bigger than before. Every container ship was put to work to move the cargo across the oceans. However, ports were built to handle a certain volume and each port has a finite number of cranes and space to store containers. When the ports became flooded with cargo, they simply didn’t have the capacity to handle it. A lack of labor, trucks, warehouse capacity, and rail infrastructure all started to create significant supply chain challenges in handling the surge of cargo.
Ships have been piling up off the coasts in ever-increasing numbers and this is taking that capacity offline as the ports try to handle it.
And this is not just an issue in the United States. This issue also exists in China. In fact, as I write this, the coastal cities of China have four times as many ships sitting off the coast as the Pacific ports in the United States do.
The oceans are also just one part of the story. To get freight to American consumers, it must go through an intricate system – shifting from port to other modes of transportation. This may include dozens of touchpoints in the domestic freight network, all of which are vulnerable to their own choke points.
Once a cargo shipment reaches the U.S. docks, it may go from truck to rail to truck to distribution center back to truck and dozens of sorting facilities in between before you receive it. Most of the capacity constraints in the domestic market have been labor-related, i.e. not enough workers at the distribution centers or drivers in the trucks. Trucking companies and warehouse operators have tried to respond by jacking up wages, but are finding that it isn’t solving their employment challenges.
Trucking has the most challenging labor picture of all; it simply is a job of last resort for many people. When construction, retail, food service, gig economy, and warehousing are all competing with the trucking industry for labor, it is often the trucking industry that loses.
After all, the lifestyle for an over-the-road driver is unique and difficult. Being forced to stay away from home for three weeks at a time is a major turn-off for many.
Truck driving is hard work and often the only recourse carriers have to attract more drivers is more money. But with alternative employment offering similar pay packages – but not requiring someone to stay away from home for weeks at a time, trucking companies are finding that new would-be drivers are not coming into the market in the numbers needed.
The challenges don’t end there. Warehouses and distribution centers have their own labor issues along with space constraints.
In the industrial sector, the supply chain issues that are causing chaos for retailers are also keeping domestic manufacturers from being able to complete the production of their finished products. The most obvious is in the automotive industry. This has an additional knock-on effect of restricting truck capacity. Even if labor supply wasn’t a major factor in the trucking industry, the carriers wouldn’t be able to get their hands on new trucks to handle the freight supply. Simply said, there aren’t enough trucks and trailers on the road to handle all of the demand.
Will the supply chain issues end soon? Very unlikely.
Even if we solve for current demand on the oceans, at the ports, in the distribution centers, and in the trucking industry, we haven’t begun to discuss what happens when the government ramps up additional domestic spending. While most supply chain professionals would agree that investing in infrastructure is the right thing to do, the worry is that it will continue to compound the imbalances between supply and demand across the supply chain.
As domestic manufacturing ramps up to handle the building of new roads, bridges, and other physical construction projects, this will put a massive onslaught of freight on the market. It will also pull labor out of the trucking industry, which will further exacerbate the driver shortage. Construction jobs will become more valuable, as contractors try to handle the surge of new projects. In turn, this will drive wages higher and increase economic growth.
For transportation providers, the good news is that it appears that we have a long way to go before the market catches up with demand. This could go on for a few years and break the typical three-year boom-and-bust cycle. For shippers and supply chain professionals that pay for capacity, while the work has never been more challenging, the rewards have also never been greater. Managing supply chains is no longer a back-office function, largely ignored and taken for granted. Going forward, business survival will require a highly functioning supply chain run by professionals with the experience and instincts to respond.
Embrace it.
September 27, 2021
Supply Chain Blues
Why are supply chains so messed up?
Craig Fuller, CEO at FreightWaves Follow on Twitter Saturday, September 25, 2021 4 minutes read
This is the question that I am asked on a daily basis. The issue is very complex, so I usually quip with a surprising response, “They’ve always had issues, but no one was really paying attention.” Turns out, unless the person works in freight, they are very unsatisfied with this answer. After all, freight and products just seemed to automatically show up before, but that is no longer the case.
Anyone that has been around supply chains knows that there have always been issues and challenges. Weather, economic cycles, capacity, pricing fluctuations, labor strikes, war, terrorism, policy changes, etc. -– have been with us since trade first began and those issues (and others) have always been a part of managing cargo flows. But 2021 is something much bigger entirely. Why is that?
The simple answer is there is a sudden and massive surge of demand that far outweighs the market’s capacity. The global supply chain infrastructure that exists simply can’t handle the volume of products flowing through the economy. The root cause can be blamed on the extraordinary government stimulus that has stimulated demand.
As the money flowed from the government, it ended up in the hands of consumers and businesses that spent it. The transfer of money coincided with a shift in consumer demand from purchasing services to purchasing physical products. This caused the United States to race through trillions of dollars of inventory while domestic and global production was shut down.
Simply stated, production was shut down while the U.S. economy went into demand overdrive. As production came back online, the manufacturing sector responded by fulfilling an unprecedented backlog of orders.
China ramped up manufacturing and products started to flow again. And the volumes were much bigger than before. Every container ship was put to work to move the cargo across the oceans. However, ports were built to handle a certain volume and each port has a finite number of cranes and space to store containers. When the ports became flooded with cargo, they simply didn’t have the capacity to handle it. A lack of labor, trucks, warehouse capacity, and rail infrastructure all started to create significant supply chain challenges in handling the surge of cargo.
Ships have been piling up off the coasts in ever-increasing numbers and this is taking that capacity offline as the ports try to handle it.
And this is not just an issue in the United States. This issue also exists in China. In fact, as I write this, the coastal cities of China have four times as many ships sitting off the coast as the Pacific ports in the United States do.
The oceans are also just one part of the story. To get freight to American consumers, it must go through an intricate system – shifting from port to other modes of transportation. This may include dozens of touchpoints in the domestic freight network, all of which are vulnerable to their own choke points.
Once a cargo shipment reaches the U.S. docks, it may go from truck to rail to truck to distribution center back to truck and dozens of sorting facilities in between before you receive it. Most of the capacity constraints in the domestic market have been labor-related, i.e. not enough workers at the distribution centers or drivers in the trucks. Trucking companies and warehouse operators have tried to respond by jacking up wages, but are finding that it isn’t solving their employment challenges.
Trucking has the most challenging labor picture of all; it simply is a job of last resort for many people. When construction, retail, food service, gig economy, and warehousing are all competing with the trucking industry for labor, it is often the trucking industry that loses.
After all, the lifestyle for an over-the-road driver is unique and difficult. Being forced to stay away from home for three weeks at a time is a major turn-off for many.
Truck driving is hard work and often the only recourse carriers have to attract more drivers is more money. But with alternative employment offering similar pay packages – but not requiring someone to stay away from home for weeks at a time, trucking companies are finding that new would-be drivers are not coming into the market in the numbers needed.
The challenges don’t end there. Warehouses and distribution centers have their own labor issues along with space constraints.
In the industrial sector, the supply chain issues that are causing chaos for retailers are also keeping domestic manufacturers from being able to complete the production of their finished products. The most obvious is in the automotive industry. This has an additional knock-on effect of restricting truck capacity. Even if labor supply wasn’t a major factor in the trucking industry, the carriers wouldn’t be able to get their hands on new trucks to handle the freight supply. Simply said, there aren’t enough trucks and trailers on the road to handle all of the demand.
Will the supply chain issues end soon? Very unlikely.
Even if we solve for current demand on the oceans, at the ports, in the distribution centers, and in the trucking industry, we haven’t begun to discuss what happens when the government ramps up additional domestic spending. While most supply chain professionals would agree that investing in infrastructure is the right thing to do, the worry is that it will continue to compound the imbalances between supply and demand across the supply chain.
As domestic manufacturing ramps up to handle the building of new roads, bridges, and other physical construction projects, this will put a massive onslaught of freight on the market. It will also pull labor out of the trucking industry, which will further exacerbate the driver shortage. Construction jobs will become more valuable, as contractors try to handle the surge of new projects. In turn, this will drive wages higher and increase economic growth.
For transportation providers, the good news is that it appears that we have a long way to go before the market catches up with demand. This could go on for a few years and break the typical three-year boom-and-bust cycle. For shippers and supply chain professionals that pay for capacity, while the work has never been more challenging, the rewards have also never been greater. Managing supply chains is no longer a back-office function, largely ignored and taken for granted. Going forward, business survival will require a highly functioning supply chain run by professionals with the experience and instincts to respond.
Embrace it.
September 27, 2021
Future Forecast
Future US chem demand fueled by re-shoring, strained by supply
Author: Al Greenwood
2021/09/22
HOUSTON (ICIS)–The US chemical industry should continue growing in the next few years, with demand being fueled by manufacturing plants returning to the country, economist Kevin Swift said on Wednesday.
However, shortages in labour and raw materials could keep chemical demand from growing faster, since these are slowing down important end markets such as automobiles and housing, Swift said.
He spoke during a presentation at the Societe de Chimie Industrielle. Swift’s comments were among his first since retiring as the chief economist for the American Chemistry Council (ACC).
The supply constraints were the downside in what is otherwise an optimistic outlook for the economy.
The purchasing managers’ index (PMI) from the Institute for Supply Management (ISM) points to further growth, Swift said. Another leading indicator, which was developed by Swift, has slowed down, but it still indicates more growth.
Swift’s indicator generally takes about three months of decline for it to signal a turn in the business cycle. “It’s not signalling that yet,” he said.
The decline is showing the effects of the Delta variant of the coronavirus, which is slowing down the leisure, hospitality and travel sectors of the economy, he said. Manufacturing continues to perform fairly well.
The number of new homes that have started construction stand at about 1.5m units, the highest since the housing crisis from 2006-2008, Swift said.
That level of housing starts reflects the millennial generation entering their peak years for house buying, Swift said.
The number of houses that have received permits but have not started construction illustrates the shortages of building materials and labour, Swift said. Some homebuilders are finishing houses without refrigerators and appliances.
The housing market is a key consumer of plastics and chemicals, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres. The ACC estimates that each new home built represents $15,000 worth of chemicals and derivatives.
Automobiles, another important end market, are also contending with supply shortages, particularly for semiconductor chips.
Those shortages should cause US automobile sales to dip during the third quarter before rebounding to an annualised rate of 17m/year, Swift said. “That’s actually a very good level, and that supports a lot of chemistry.”
In addition, automobiles in the US are becoming larger, so that will increase the amount of plastic and other chemicals that each one will consume, he said. As electric vehicles (EVs) become more popular, that will increase demand for other types of chemicals.
One exception is catalysts, which automobile companies use in catalytic converters. Because EVs have no emissions, they do not need catalytic converters.
Swift expects every major chemical end market in the US will expand in 2021. He noted weakness in printing, which reflects fewer people reading physical copies of media.
In 2022, he expects weakness in apparel and textile-mill products, two other US industries that have been in long-term decline.
RESHORING
The disruptions to supply chains have accelerated a trend towards bringing manufacturing plants closer to demand centres, a phenomenon known as reshoring.
Companies began considering reshoring 10 years ago in the aftermath of the Fukushima earthquake in Japan.
The earthquake shut down plants that were the sole suppliers of critical electrical chemicals, Swift said. Fukushima was a wake-up call for companies to start developing more resilient supply chains.
The coronavirus pandemic proved to be a bigger shock to supply chains, and Swift expects more companies to reshore production to North America.
The trend should benefit demand for plastic additives and electronic chemicals.
CHEM INVENTORIES REMAIN LOW
Inventories of chemicals should remain low until 2022, Swift said.
US chemical producers have struggled to restock because of disruptions caused by the coronavirus, an active hurricane season in 2020, winter storm Uri and more hurricanes in 2021.
“We just can’t seem to win this year with the weather,” Swift said.
For the economy in general, Swift warned that it could take time for all the supply constraints to become resolved. “It might take two years in some cases.”
US CHEMS TO MAINTAIN COST ADVANTAGE
Swift expects the US chemical industry to maintain its cost advantage through at least 2024. During that time, Brent oil prices should remain at $60-80/bbl.
US chemical producers benefit from relatively high oil prices because they overwhelmingly rely on gas-based feedstock such as ethane. Meanwhile, much of the world relies on oil-based naphtha.
As a rule of thumb, the US chemical industry has a cost advantage when oil prices are at least 7 times higher than those for natural gas.
That ratio has remained above 7 even with the recent rally in US prices for natural gas, which broke $5/MMBtu for the first time in years.
CHEMICAL UTILISATION RATES TO RISE
Swift expects average utilisation rates for the chemical industry to rise in the upcoming years because companies have announced few new projects.
Chemical producers began announcing plans to build new US plants in the early 2010s in response to the advent of shale gas, Swift said. Those announcements peaked in 2014 and have since trailed off.
New plants take six to eight years to complete, he said. With that, the pace of new plant start-ups should slow in the second half of this decade.
If demand continues to rise, then utilisation rates should increase rise by quite a bit, Swift said.
High operating rates benefit chemical companies because it lowers their production costs for each tonne of product that they manufacture.
September 27, 2021
Future Forecast
Future US chem demand fueled by re-shoring, strained by supply
Author: Al Greenwood
2021/09/22
HOUSTON (ICIS)–The US chemical industry should continue growing in the next few years, with demand being fueled by manufacturing plants returning to the country, economist Kevin Swift said on Wednesday.
However, shortages in labour and raw materials could keep chemical demand from growing faster, since these are slowing down important end markets such as automobiles and housing, Swift said.
He spoke during a presentation at the Societe de Chimie Industrielle. Swift’s comments were among his first since retiring as the chief economist for the American Chemistry Council (ACC).
The supply constraints were the downside in what is otherwise an optimistic outlook for the economy.
The purchasing managers’ index (PMI) from the Institute for Supply Management (ISM) points to further growth, Swift said. Another leading indicator, which was developed by Swift, has slowed down, but it still indicates more growth.
Swift’s indicator generally takes about three months of decline for it to signal a turn in the business cycle. “It’s not signalling that yet,” he said.
The decline is showing the effects of the Delta variant of the coronavirus, which is slowing down the leisure, hospitality and travel sectors of the economy, he said. Manufacturing continues to perform fairly well.
The number of new homes that have started construction stand at about 1.5m units, the highest since the housing crisis from 2006-2008, Swift said.
That level of housing starts reflects the millennial generation entering their peak years for house buying, Swift said.
The number of houses that have received permits but have not started construction illustrates the shortages of building materials and labour, Swift said. Some homebuilders are finishing houses without refrigerators and appliances.
The housing market is a key consumer of plastics and chemicals, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres. The ACC estimates that each new home built represents $15,000 worth of chemicals and derivatives.
Automobiles, another important end market, are also contending with supply shortages, particularly for semiconductor chips.
Those shortages should cause US automobile sales to dip during the third quarter before rebounding to an annualised rate of 17m/year, Swift said. “That’s actually a very good level, and that supports a lot of chemistry.”
In addition, automobiles in the US are becoming larger, so that will increase the amount of plastic and other chemicals that each one will consume, he said. As electric vehicles (EVs) become more popular, that will increase demand for other types of chemicals.
One exception is catalysts, which automobile companies use in catalytic converters. Because EVs have no emissions, they do not need catalytic converters.
Swift expects every major chemical end market in the US will expand in 2021. He noted weakness in printing, which reflects fewer people reading physical copies of media.
In 2022, he expects weakness in apparel and textile-mill products, two other US industries that have been in long-term decline.
RESHORING
The disruptions to supply chains have accelerated a trend towards bringing manufacturing plants closer to demand centres, a phenomenon known as reshoring.
Companies began considering reshoring 10 years ago in the aftermath of the Fukushima earthquake in Japan.
The earthquake shut down plants that were the sole suppliers of critical electrical chemicals, Swift said. Fukushima was a wake-up call for companies to start developing more resilient supply chains.
The coronavirus pandemic proved to be a bigger shock to supply chains, and Swift expects more companies to reshore production to North America.
The trend should benefit demand for plastic additives and electronic chemicals.
CHEM INVENTORIES REMAIN LOW
Inventories of chemicals should remain low until 2022, Swift said.
US chemical producers have struggled to restock because of disruptions caused by the coronavirus, an active hurricane season in 2020, winter storm Uri and more hurricanes in 2021.
“We just can’t seem to win this year with the weather,” Swift said.
For the economy in general, Swift warned that it could take time for all the supply constraints to become resolved. “It might take two years in some cases.”
US CHEMS TO MAINTAIN COST ADVANTAGE
Swift expects the US chemical industry to maintain its cost advantage through at least 2024. During that time, Brent oil prices should remain at $60-80/bbl.
US chemical producers benefit from relatively high oil prices because they overwhelmingly rely on gas-based feedstock such as ethane. Meanwhile, much of the world relies on oil-based naphtha.
As a rule of thumb, the US chemical industry has a cost advantage when oil prices are at least 7 times higher than those for natural gas.
That ratio has remained above 7 even with the recent rally in US prices for natural gas, which broke $5/MMBtu for the first time in years.
CHEMICAL UTILISATION RATES TO RISE
Swift expects average utilisation rates for the chemical industry to rise in the upcoming years because companies have announced few new projects.
Chemical producers began announcing plans to build new US plants in the early 2010s in response to the advent of shale gas, Swift said. Those announcements peaked in 2014 and have since trailed off.
New plants take six to eight years to complete, he said. With that, the pace of new plant start-ups should slow in the second half of this decade.
If demand continues to rise, then utilisation rates should increase rise by quite a bit, Swift said.
High operating rates benefit chemical companies because it lowers their production costs for each tonne of product that they manufacture.
September 23, 2021
Storm Updates
Tropical Storm Nicholas – Update 13
Updated 9/22/2021 at 2:00 p.m. CDT – Updates in bold
Nicholas made landfall southwest of Sargent, TX as a Category 1 Hurricane with maximum sustained winds of 75 mph at approximately 12:30 a.m. CDT on Sep 14. The storm was shortly downgraded back to a tropical storm.
According to poweroutage.us, power was mostly restored in the impacted Texas coastal area as of Tuesday, Sep 21.
CHEMICAL & REFINING OPERATIONS
- LyondellBasell’s Matagorda Complex in Bay City, TX had resumed operations as of Sep 22, the facility had previously safely shut down due to widespread power outages in the area (per company spokesperson)
Hurricane Ida – Update 36
Updated 9/22/2021 at 2:00 p.m. CDT – Updates in bold
Hurricane Ida made landfall near Port Fourchon, LA around 11:55 a.m. CDT on Sunday, Aug 29 as an “extremely dangerous” Category 4 storm with maximum sustained winds of 150 mph, which is very close to a Category 5 hurricane, and a minimum central pressure of 930 mb, according to the National Weather Service (NWS) National Hurricane Center (NHC).
The storm maintained major category strength as it made its way over most of the petrochemical industry in southeastern Louisiana. At approximately 9 p.m. CDT on Sunday, Aug 29, an estimated nine hours after making landfall, Hurricane Ida weakened to a Category 2 hurricane with its eye just north of Garyville, LA, according to NWS. By 11 p.m. CDT, Hurricane Ida had decreased to a Category 1 hurricane near Maurepas, LA.
Louisiana produces nearly 25 billion pounds of ethylene each year (29% of US capacity). Based on the path of Hurricane Ida, it is estimated that 61.5% Louisiana’s ethylene capacity was offline immediately after the storm’s landfall, representing approximately 18% of total US capacity. For a list of current ethylene capacity that is offline by facility, please see page 7 of the OPIS PCW Daily Wire report.
Downstream, the storm affected roughly 14% of North American PE capacity, 11% of North American PP capacity and 25% of North American PS capacity. Approximately 40% of US PVC production was down. Hurricane Ida impacted 44% of the US styrene capacity (37% of North American capacity).
According to poweroutage.us, an estimated 25,790 customers were without power in southeastern Louisiana as of Wednesday, Sep 22 at approximately 1:45 p.m. CDT; this compares to an estimated 20,008 outages on Sep 21. Please see the “Facility Location by Parish” section below for power outage details by parish according to data published by poweroutage.us.
FACILITY LOCATION BY PARISH
Ascension Parish – estimated 0.4% tracked customers without power
- BASF at Geismar
- Lion Copolymer at Geismar
- Lonestar at Geismar
- NOVA at Geismar
- Occidental at Geismar
- Shell at Geismar
- Westlake at Geismar
East Baton Rouge Parish – estimated 0% tracked customers without power
- Deltech at Baton Rouge
- ExxonMobil at Baton Rouge
- Formosa at Baton Rouge
Iberville Parish – estimated 0.2% tracked customers without power
- Dow at Plaquemine
- Shintech at Plaquemine
- Total at Carville
- Westlake at Plaquemine
Jefferson Parish – estimated 1.7% tracked customers without power
- Cornerstone at Fortier
Plaquemines Parish – estimated 0.5% tracked customers without power
- Phillips 66 at Belle Chasse
St Bernard Parish – estimated 0% tracked customers without power
- Chalmette Refining (PBF) at Chalmette
- Murphy Oil (Valero) at Meraux
St Charles Parish – estimated 3.8% tracked customers without power
- Dow at St Charles
- Motiva at Norco
- Shell at Norco
- Valero at St Charles
St James Parish – estimated 0.2% tracked customers without power
- Occidental at Convent
- Americas Styrenics at St James
St John the Baptist Parish – estimated 22.3% tracked customers without power
- Marathon at Garyville
- Pinnacle Polymers at Garyville
West Baton Rouge Parish – estimated 0% tracked customers without power
- ExxonMobil at Port Allen
- Placid Refining at Port Allen
- Shintech at Addis
CHEMICAL & REFINING OPERATIONS
Facilities that have begun the restart process:
- Americas Styrenics began restart processes at its facility in St James, LA on Sep 12; the facility previously closed in preparation for the storm (per company spokesperson)
- Chalmette Refining (PBF Energy) at Chalmette, LA was confirmed to have restarted and is understood to be running at normal rates; the facility originally lost power on Aug 29 (per company spokesperson)
- Dow Chemical has begun bringing operations back online at Plaquemine, LA as of Sep 8 as third-party utility balances and raw materials availability allow; the facility was originally shut on Aug 29 (per company website)
- ExxonMobil stated on Sep 2 that it is in the process of restarting its refinery at Baton Rouge; the last update provided about the Baton Rouge chemical facilities was on Aug 31: “The Baton Rouge refinery, chemical plant and other ExxonMobil Baton Rouge facilities are safely progressing restart procedures. Our facilities did not sustain any significant damage during the hurricane.” The refinery had shut on Aug 30 (per company website)
- NOVA Chemicals said on Sep 17 that its “Geismar site has restarted and is operational”; the company began a safe and controlled shutdown of its facility in preparation for the storm on Aug 27 (per company spokesperson)
- OxyChem’s plants at Geismar, LA have returned to normal operations, and the plants at Convent, LA were in the process of coming online as of Sep 17; the plants at Taft, LA are expected to restart the week of Sep 20 (per company spokesperson)
- Pinnacle Polymers restarted the first line of its Garyville, LA plant and was producing prime resin as of the evening of Sep 15; the second line restarted and was expected to be producing prime resin on Sep 16 (per company source); the company declared force majeure on Aug 30 for all PP products due to the impacts of Hurricane Ida (per customer letter)
- Placid Refining at Port Allen, LA has power supply restored and after borrowing 300,000 bbl of crude from the Strategic Petroleum Reserve has been able to begin restarting processing units during the week of Sep 7 (OPIS News)
- Shell announced its Geismar, LA facility had restarted as of Sep 14 at 7 p.m. CDT, noting that the site was operating at reduced rates as it continued to experience utility and feedstocks constraints but has resumed loading and shipping product, subject to product availability (per company website)
- Valero refinery restarts were underway as of Sep 14 at the Meraux (Murphy Oil) and St Charles, LA sites near New Orleans, including Diamond Green Diesel; the facilities shut down prior to the storm making landfall (per company website)
- Westlake Chemical’s plants at Geismar and Plaquemine, LA were running at low rates and were waiting on an increase in nitrogen feed to ramp up further; the two facilities shut prior to Ida’s landfall; on Aug 31, the company reported limited damage and that restart was dependent primarily on availability of utilities, feedstocks and industrial gases (per company spokesperson); the company declared a system-wide force majeure on Aug 31 on PVC and VMC out of these two facilities (per customer letter)
Petrochemical assets that are confirmed to have shut include:
- BASF shut down its facility in Geismar, LA in anticipation of the Hurricane Ida (per company spokesperson)
- Cornerstone at Fortier, LA, which produces acrylonitrile, shut down on Aug 28 in preparation for Hurricane Ida; the facility lost power on Aug 29 and was running on auxiliary power to maintain key safety and environmental equipment as of Aug 31; the company completed an assessment on Aug 30 and found “no significant damage to Cornerstone assets. There are wind driven impacts to secondary building roofing systems, cooling tower exteriors, and insulation. First repairs commenced on August 31, 2021. At this time we do not believe damages incurred within the Cornerstone Energy Park fence line will impact a restart schedule.” (per company report on Aug 31)
- Dow declared force majeure on HDPE and LLDPE from its Taft (St Charles), LA plant on Sep 8, citing the unplanned shutdown and disruptions in operations, logistics and raw material supply due to Hurricane Ida, the company said that the St Charles site was “making progress toward restart of operations” and it expects to have a clearer timeline for restart sequencing later that week, based on repairs and as third-party utility balances and raw materials availability allow; the facility was originally shut on Aug 29 (per customer letter/company website)
- Galata Chemicals, which produces additives used by the PVC industry, on Aug 30 declared force majeure on supply of products manufactured at its facility in Taft, LA due to lack of electricity, availability of equipment for inbound and outbound shipments as well as other factors (per customer letter)
- Lion Elastomers announced on Sep 1 that its EPDM facility at Geismar, LA sustained no significant damage from Hurricane Ida, the site was waiting to confirm “a stable return of electrical power and utilities, personnel, and the required feedstocks” to being the process of returning to normal production and business operations; the company had previously idled production at this facility on Aug 30 in preparation for the storm (per company website)
- Marathon Petroleum’s refinery at Garyville, LA safely shut down prior to Hurricane Ida’s landfall; on Aug 31, minor damage was confirmed, generators were being used to “power aspects of our operations that enable us to progress with repairs and assessments” (per company spokesperson)
- Phillips 66 shut operations on Aug 27 at the Alliance Refinery in Belle Chasse, LA; on Aug 30, the company confirmed that there was water in the refinery and the facility remained shut; on Sep 1, the company confirmed it “discovered a sheen of unknown origin in some flooded areas of Alliance Refinery. At this time, the sheen appears to be secured and contained within refinery grounds… A full post-storm assessment remains underway at the refinery…The refinery remains shut down. Timelines for operational restarts are largely dependent on assessment impacts and access to electricity and other utilities.” (per company website)
- Shell issued an update about Norco, LA on Sep 12: “The Shell Norco Manufacturing facility continues to assess impacts from Hurricane Ida. The site continues to flare residual light hydrocarbon material with visible smoking. We are continuing to complete repairs and we are making improvements to minimize visible flaring until power is fully restored…” (per company website)
- TotalEnergies (Cosmar) at Carville, LA said on Sep 7 that partial power was restored at its PS plant in Carville, LA and that a restart plan was being developed based on power and outside service availability; the unit shut down prior to Hurricane Ida’s landfall (per company spokesperson)
Additional petrochemical assets in Louisiana that were in the path of Hurricane Ida and are understood to have shut include:
- Deltech at Baton Rouge
- Lonestar at Geismar
- Motiva at Norco
www.petrochemwire.com/storm-coverage/
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