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VOLUME XXI
September 14, 2023
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March 4, 2021
Car seat foam shortage threatens to derail auto production, report says
Automakers continue to suffer through a semiconductor shortage, but there may be another issue brewing in the background: foam. Specifically, the foam that goes into millions of car seats we sit on every day when going for a drive. According to a report from Automotive News on Thursday, suppliers are “scrambling” to restart production following the devastating Texas winter storms last month.
The storms knocked power offline for millions of residents and produced water shortages statewide, and the state’s petrochemical plants didn’t go unscathed. Two sources spoke with the publication saying things are fine for now, but the problem may become serious in the coming weeks. One source cautioned this is a “threat” and not a “given,” depending on how the sector ramps up production again. But the semiconductor shortage has left automakers in a tough spot as they shut down plants across North America. A second supplier issue to hit the industry would compound the problem.
Stellantis, the merged automaker formed from Fiat Chrysler Automobiles and PSA Group, told Roadshow, “We are closely monitoring the situation. At this time, we do not expect an impact on our operations.” A GM spokesperson said, “GM continues to work closely with the supply base to mitigate the impacts caused by the significant winter weather that affected a large portion of the country the week of Feb. 15. We don’t anticipate any immediate production impacts.” Ford did not immediately return a request for comment on the report.
If the coronavirus pandemic taught us anything, these situations are mighty fluid. Last year, nearly every major automaker stopped vehicle production to slow the spread of COVID-19, and each carefully navigated their way to reopening their facilities. One of the report’s sources mentioned seat supplier production lines may start to run out of foam by this coming Monday; we’ll have to wait and see how the situation unfolds.
March 4, 2021
Car seat foam shortage threatens to derail auto production, report says
Automakers continue to suffer through a semiconductor shortage, but there may be another issue brewing in the background: foam. Specifically, the foam that goes into millions of car seats we sit on every day when going for a drive. According to a report from Automotive News on Thursday, suppliers are “scrambling” to restart production following the devastating Texas winter storms last month.
The storms knocked power offline for millions of residents and produced water shortages statewide, and the state’s petrochemical plants didn’t go unscathed. Two sources spoke with the publication saying things are fine for now, but the problem may become serious in the coming weeks. One source cautioned this is a “threat” and not a “given,” depending on how the sector ramps up production again. But the semiconductor shortage has left automakers in a tough spot as they shut down plants across North America. A second supplier issue to hit the industry would compound the problem.
Stellantis, the merged automaker formed from Fiat Chrysler Automobiles and PSA Group, told Roadshow, “We are closely monitoring the situation. At this time, we do not expect an impact on our operations.” A GM spokesperson said, “GM continues to work closely with the supply base to mitigate the impacts caused by the significant winter weather that affected a large portion of the country the week of Feb. 15. We don’t anticipate any immediate production impacts.” Ford did not immediately return a request for comment on the report.
If the coronavirus pandemic taught us anything, these situations are mighty fluid. Last year, nearly every major automaker stopped vehicle production to slow the spread of COVID-19, and each carefully navigated their way to reopening their facilities. One of the report’s sources mentioned seat supplier production lines may start to run out of foam by this coming Monday; we’ll have to wait and see how the situation unfolds.
March 4, 2021
Container chaos will take through to Q3 to resolve: TPM
Sam ChambersMarch 2, 20213 17,375 3 minutes read
Shippers have been told they’ll need to wait through to the second half of the year before any semblance of normality returns to container trade flows. The CEOs of three of the world’s leading global carriers – Ocean Network Express (ONE), Hapag-Lloyd and Maersk – have been speaking at TPM, the world’s top container shipping event, organised by the Journal of Commerce, during which they discussed the current supply chain logjam and potential routes out of the ongoing container crunch.
Jeremy Nixon, the CEO of Japanese carrier ONE, discussed issues relating to terminal productivity in North America, which lag Asian counterparts by up to 50% thanks to less working hours.
Splash has reported repeatedly on the record ship queues at ports on both North American coasts in recent weeks.
When quizzed as to when normal cargo flows would return on the transpacific, Nixon said that because of all the ships alongside or at anchor in North America: “We’re actually running out of ships in Asia.”
“Frankly we’ve probably got another three to four months to work this through,” Nixon said, adding: “Hopefully by the second half of 2021 we should see a more stabilised trade.”
Nixon told TPM attendees that liners and their clients need to get better at forecasting, at working out how booking patterns will change. ONE is developing its own predictive analytics looking at the movement of cargoes.
We’ve probably got another three to four months to work this through
Presenting from the port of Hamburg with one of his ships, the Philadelphia Express, in the background, Rolf Habben Jansen, the CEO of Hapag-Lloyd, told TPM delegates that today’s strong volumes would continue for “quite some time”.
Like Nixon, Habben Jansen talked about the tight availabilities of both boxes and ships at the moment, which combined with terminal delays have created a “perfect storm that everybody needs to work through”.
“We will get to some kind of normalcy hopefully within one or two quarters,” the Hapag-Lloyd boss said, going on to claim that the types of peaks seen in the market in recent months are not good for everyone, calling for a return to stability.
“By Q3 it ought to be more or less a normal situation again,” Habben Jansen predicted.
Vincent Clerc, the CEO Of A.P. Moller-Maersk Ocean & Logistics, the world’s largest containerline, said that global supply chains had never before experienced the stress tests of the past few months.
As with his liner counterparts, Clerc noted the underinvestment along the coastline of North America as a critical part of today’s backed-up box crisis.
While containerlines have been reaping enormous profits, Clerc said that for him and his Maersk colleagues it has not felt like a “big high-five moment” because of all the inconveniences clients were facing with delays and rolled cargoes.
Latest data from Sea-Intelligence showed that global schedule reliability dropped to a record low of 34.9% in January – or put another way, just one in three boxes was arriving on time last month – a period of time where shippers were paying record sums for their goods to be shipped.
For Asia-North America west coast, almost 87% of the arrivals were late last month, according to Sea-Intelligence analysis. And when they are late, they are on average more than 10 days late.
Clerc told TPM delegates that Maersk views the current unexpected surge in consumer demand as temporary. Clerc said Maersk is forecasting a return to a more normal base – similar to 2019 levels – during the course of 2021.
The pandemic has not changed Maersk’s long term view of the industry with “fairly subdued” long-term growth anticipated, Clerc said.
“I don’t think anyone expects the current level of shipments to be a new normal from which growth will accelerate,” Clerc said.
The Maersk CEO also told delegates that within five years he expects close to 100% of the liner’s business to be based on two-way binding contracts.
“It makes sense that we have a clear view on what we are going to do for each other,” Clerc said.
Splash will be bringing further news from TPM this week, including a report on what Bill Gates, the Microsoft co-founder, has to say. He is due to speak later today, promoting a new book entitled How to Avoid a Climate Disaster.
March 4, 2021
Container chaos will take through to Q3 to resolve: TPM
Sam ChambersMarch 2, 20213 17,375 3 minutes read
Shippers have been told they’ll need to wait through to the second half of the year before any semblance of normality returns to container trade flows. The CEOs of three of the world’s leading global carriers – Ocean Network Express (ONE), Hapag-Lloyd and Maersk – have been speaking at TPM, the world’s top container shipping event, organised by the Journal of Commerce, during which they discussed the current supply chain logjam and potential routes out of the ongoing container crunch.
Jeremy Nixon, the CEO of Japanese carrier ONE, discussed issues relating to terminal productivity in North America, which lag Asian counterparts by up to 50% thanks to less working hours.
Splash has reported repeatedly on the record ship queues at ports on both North American coasts in recent weeks.
When quizzed as to when normal cargo flows would return on the transpacific, Nixon said that because of all the ships alongside or at anchor in North America: “We’re actually running out of ships in Asia.”
“Frankly we’ve probably got another three to four months to work this through,” Nixon said, adding: “Hopefully by the second half of 2021 we should see a more stabilised trade.”
Nixon told TPM attendees that liners and their clients need to get better at forecasting, at working out how booking patterns will change. ONE is developing its own predictive analytics looking at the movement of cargoes.
We’ve probably got another three to four months to work this through
Presenting from the port of Hamburg with one of his ships, the Philadelphia Express, in the background, Rolf Habben Jansen, the CEO of Hapag-Lloyd, told TPM delegates that today’s strong volumes would continue for “quite some time”.
Like Nixon, Habben Jansen talked about the tight availabilities of both boxes and ships at the moment, which combined with terminal delays have created a “perfect storm that everybody needs to work through”.
“We will get to some kind of normalcy hopefully within one or two quarters,” the Hapag-Lloyd boss said, going on to claim that the types of peaks seen in the market in recent months are not good for everyone, calling for a return to stability.
“By Q3 it ought to be more or less a normal situation again,” Habben Jansen predicted.
Vincent Clerc, the CEO Of A.P. Moller-Maersk Ocean & Logistics, the world’s largest containerline, said that global supply chains had never before experienced the stress tests of the past few months.
As with his liner counterparts, Clerc noted the underinvestment along the coastline of North America as a critical part of today’s backed-up box crisis.
While containerlines have been reaping enormous profits, Clerc said that for him and his Maersk colleagues it has not felt like a “big high-five moment” because of all the inconveniences clients were facing with delays and rolled cargoes.
Latest data from Sea-Intelligence showed that global schedule reliability dropped to a record low of 34.9% in January – or put another way, just one in three boxes was arriving on time last month – a period of time where shippers were paying record sums for their goods to be shipped.
For Asia-North America west coast, almost 87% of the arrivals were late last month, according to Sea-Intelligence analysis. And when they are late, they are on average more than 10 days late.
Clerc told TPM delegates that Maersk views the current unexpected surge in consumer demand as temporary. Clerc said Maersk is forecasting a return to a more normal base – similar to 2019 levels – during the course of 2021.
The pandemic has not changed Maersk’s long term view of the industry with “fairly subdued” long-term growth anticipated, Clerc said.
“I don’t think anyone expects the current level of shipments to be a new normal from which growth will accelerate,” Clerc said.
The Maersk CEO also told delegates that within five years he expects close to 100% of the liner’s business to be based on two-way binding contracts.
“It makes sense that we have a clear view on what we are going to do for each other,” Clerc said.
Splash will be bringing further news from TPM this week, including a report on what Bill Gates, the Microsoft co-founder, has to say. He is due to speak later today, promoting a new book entitled How to Avoid a Climate Disaster.
March 4, 2021
US polymer prices extend post-freeze rises
- Author
- Kristen Hays
- Editor
- Richard Rubin
- Commodity
- Petrochemicals
Houston — US export polymer prices extended sharp upticks March 3 as hopes of a fairly quick return to normal output faded further in the aftermath of the deep freeze that enveloped the US Gulf Coast for days in mid-February, knocking a huge swath of petrochemical capacity offline.
Prices for multiple grades of US polyethylene reached multi-year highs week on week March 3 amid an acute lack of volume availability, strong demand and limited stocks, market sources said.
Spot export low density PE prices surged $210/mt on the week to $1,830-$1,852/mt FAS Houston, the highest level in more than 12.5 years, S&P Global Platts data showed.
High density blowmolding PE prices climbed $165/mt week on week to $1,642-$1,664/mt FAS, a near 6.5-year high. And linear low density PE prices also hit a 6.5-year high on the week, up $276/mt on the week at $1,654-$1,676/mt, Platts data showed.
US export polyvinyl chloride prices also were assessed March 3 at a fresh all-time high of $1,595-$1,605/mt FAS, on a deal done at $1,600/mt, with about 57% of US PVC capacity offline.
Latin American markets also felt the squeeze for products that regularly flow from the US.
The storm’s effects were much more widespread than hurricanes that routinely assault the US Gulf Coast each year, as 40 MW of Texas power generation was offline at the height of the freeze, leaving millions of structures from homes to industrial plants without heat or running water.
Petrochemical restart efforts have been slow, with many ups and downs, as downstream derivative units await reliable olefin feedstocks. Sources said those production chains need to restart sequentially.
Many sources don’t expect normalcy until deep into the second quarter.
“It’s going to be slow,” a source said. “Before everything is recovered, it’s going to be June.”
Here is a rundown of the fallout from the freeze:
FORCE MAJEURES
**Dow Chemical: Declared Feb. 19, on 2-ethylhexanol and butanol products from its Texas City, Texas complex
**Formosa Plastics USA: Declared Feb. 19 on US polyethylene
**BASF: Declared Feb. 19 on dioctyl terephthalate (DOTP), a plasticizer, at its Pasadena, Texas, site
**Westlake Chemical: Declared Feb. 19 on US caustic soda, chlorine, PVC and VCM; company has 2.9 million mt/year of US caustic soda capacity, more than 2 million mt/year of PVC capacity, 2.6 million mt/year of VCM; more than 2.26 million mt/year of chlorine capacity at five affected sites
**Formosa Plastics USA: Declared Feb. 18 on US PVC, 1.3 million mt/year of capacity at Point Comfort, Texas, and Baton Rouge, Louisiana, complexes.
**Dow Chemical: Declared Feb. 18 on multiple intermediate chemicals produced at plants in Deer Park, Freeport, Texas City and Bayport Texas, Hahnville, Louisiana, and Louisville, Kentucky; declaration includes vinyl acetate monomer (VAM), methyl methacrylate (MMA), glacial methacrylic acid (GMAA), butyl methacrylate (BMA), glycidyl methacrylate (GMA), 2-ethylhexyl Acrylate (2EHA), butyl acrylate (BA), and others; Dow informed South American customers
**Celanese: Declared force majeure Feb. 18 on multiple intermediate chemicals normally sold to customers in the US, Europe and the Middle East, including acetic acid, VAM, ethyl acetate and ethylene vinyl acetate (EVA)
**Total: Declared Feb. 17 on polypropylene produced at its 1.15 million mt/year La Porte, Texas, facility
**Formosa Plastics USA: Declared Feb. 17 on all chlor-alkali products
**LyondellBasell: Declared Feb. 16 on styrene monomer
**Vestolit: Declared Feb. 16 on PVC produced at its Colombia and Mexico plants on lack of upstream vinyl chloride monomer feedstock from US suppliers; plants have a combined 1.8 million mt/year of capacity
**Olin: Declared Feb. 16 on US chlorine, caustic soda, ethylene dichloride, epoxy, hydrochloric acid and other products produced at its Freeport, Texas, complex; ; on Feb. 18 Olin expanded the declaration in a separate letter to customers to include products made system-wide
**MEGlobal: Declared Feb. 15 on MEG produced at its Freeport, Texas, site
**LyondellBasell: Declared Feb. 15 on US polyethylene
**Flint Hills Resources: Declared Feb. 15 on polypropylene produced at Longview, Texas
**OxyChem: Declared Feb. 15 on US chlorine, caustic soda, EDC, vinyl chloride monomer and polyvinyl chloride.
**LyondellBasell: Declared Feb. 15 on US polypropylene
**INEOS Olefins and Polymers USA: Declared Feb. 15 on polypropylene
**OQ Chemicals: Declared Feb. 15 on US oxo-alcohols, aldehydes, acids and esters produced at its Bat City, Texas, operations
SHUTDOWNS
**Chevron Phillips Chemical, three crackers with a combined capacity of 1.36 million mt/year of capacity, Sweeny, Texas
**Westlake Chemical: 331,763 mt/year cracker, 249,475 mt/year chlorine, 274,423 mt/year caustic soda, 680,388 mt/year vinyl chloride monomer, 680,388 mt/year polyvinyl chloride, Calvert City, Kentucky
**Eastman Chemical: 730,000 mt/year ethylene capacity, Longview, Texas
**INEOS: 1.89 million mt/year of ethylene capacity, Chocolate Bayou, Texas
**LyondellBasell: 2.29 million mt/year of ethylene capacity in La Porte and Corpus Christi, Texas
**MEGlobal: 750,000 mt/year monoethylene glycol (MEG) plant, Freeport, Texas
**Total: 1.15 million mt/year PP, La Porte, Texas
**Lotte Chemical: 700,000 mt/year MEG, 1 million mt/year joint-venture cracker, Lake Charles, Louisiana
**Braskem: 225,000 mt/year PP, Seadrift, Texas
**ExxonMobil: Cumulative 1.53 million mt/year from three units, HDPE and LLDPE capacity, Mont Belvieu, Texas
**Indorama Ventures: 1 million mt/year ethylene oxide/MEG unit, 238,135 mt/year propylene oxide unit, and 988,000 mt/year of MTBE capacity; Clear Lake, Texas, 435,000 mt/year EO, 358,000 mt/year MEG; Port Neches, Texas
**Olin: Freeport, Texas complex, with 3 million mt/year of caustic soda and 2.73 million mt/year of chlorine capacity; 748,000 mt/year of EDC
**OxyChem: Ingleside, Texas, 544,000 mt/year cracker; 248,000 mt/year chlor-alkali; 680,000 mt/year EDC; Deer Park and Pasadena, Texas, 1.27 million mt in PVC capacity; 1.79 million mt/year of VCM capacity; 580,000 mt/year chlor-alkali
**Shintech: Freeport, Texas: 1.45 million mt/year PVC
**Formosa Plastics USA: Point Comfort, Texas, including three crackers with a cumulative capacity of 2.76 million mt/year; 875,000 mt/year of high density polyethylene; 400,000 mt/year of low density PE; 465,000 mt/year of linear low density PE; 798,000 mt/year of PVC; 1 million mt/year of caustic soda and 910,000 mt/year of chlorine; 753,000 mt/year of VCM; 1.478 million mt/year of EDC; and a cumulative 1.17 million mt/year of monoethylene glycol operated by sister company Nan Ya Plastics.
**Dow Chemical: Certain units offline within Dow sites along the US Gulf Coast, but the company did not specify. Dow’s Gulf Coast operations two LDPE units with 552,000 mt/year and 186,000 mt/year HDPE; Dow’s Seadrift, Texas, complex includes 490,000 mt/year LLDPE and 390,000 mt/year HDPE; Dow told South American customers in a letter dated Feb. 16 that the company was assessing impact on PE production capacity “and we know that our ability to supply various products could be affected.”
**Dow Chemical, 998,000 mt/year cracker, Freeport, Texas
**TPC Group: Houston site, including 544,310 mt/year butadiene unit, when boilers lost steam
**CP Chem: Pasadena, Texas, 998,000 mt/year HDPE
**CP Chem: 853,000 mt/year cracker, Port Arthur, Texas
**Westlake Chemical, 632,000 mt/year cracker, Lake Charles, Louisiana
RESTARTS
**Formosa Plastics USA, restarting PP production at Point Comfort, Texas, complex; has two PP units with combined capacity of 1.7 million mt/year
**Shell: restarting two crackers with a combined 961,000 mt/year of capacity, Deer Park, Texas
**OxyChem/Orbia, restarting 550,000 mt/year cracker, Ingleside, Texas
**LyondellBasell, restarting two crackers with a combined 1.93 million mt/year of capacity, Channelview, Texas
**CP Chem, restarting two crackers with a combined 1.9 million mt/year of capacity, Cedar Bayou, Texas
**CP Chem, restarting 853,000 mt/year cracker, Port Arthur, Texas
**Indorama Ventures, restarting 235,867 mt/year cracker, Port Neches, Texas
**Dow Chemical, restarting 680,000 mt/year cracker, Freeport, Texas
**Braskem: 360,000 mt/year PP Freeport, Texas; 400,000 mt/year PP, La Porte, Texas
**Motiva Chemicals: restarted 635,000 mt/year mixed-feed cracker, Port Arthur, Texas
**Shell: Norco, Louisiana, restarted two crackers with a combined 1.4 million mt/year of capacity
**Baystar Polymers: Restarting 408,000 mt/year HDPE unit at Bayport, Texas
**Flint Hills Resources: Restarting 658,000 mt/year PDH unit, Houston
**Dow Chemical: Restarting 750,000 PDH, Freeport, Texas
**Braskem: Restarting 450,000 mt/year PP, La Porte, Texas
**Dow Chemical: restarted 680,000 mt/year cracker in Orange, Texas
**ExxonMobil: Beaumont, Texas, restart activity begun; 826,000 mt/year cracker operational; 225,000 mt/year HDPE; 240,000 mt/year LDPE; 1.19 million mt/year LLDPE with some HDPE capacity
**ExxonMobil: Baytown, Texas, restart activity begun; three crackers with a combined capacity of 3.8 million mt/year; 800,000 mt/year PP
**Sasol: restarted 380,000 mt/year EO/MEG, Lake Charles, Louisiana
**Formosa Plastics USA: restarted 513,000 mt/year PVC, 653,000 mt/year VCM, Baton Rouge, Louisiana
**LyondellBasell: Lake Charles, Louisiana, joint-venture 470,000 mt/year LLDPE; 420,000 mt/year LDPE
PRICES
**Spot export HDPE blowmolding, LLDPE butene and LDPE prices all reached multi-year highs March 3 of $1,642-$1,664/mt, $1,654-$1,676/mt and $1,830-$1,852/mt, respectively, all FAS Houston.
**US export polyvinyl chloride prices reached a fresh all-time high March 3 on a deal done at $1,600/mt FAS Houston, up $200/mt on the week.
**West Coast South America PVC prices rose $140/mt week on week March 3 to a fresh all-time high of $1,695-$1,705/mt CFR WCSA on the lack of US volume availability
**The CFR Brazil PVC marker gained $100/mt week on week to $1,795-$1,805/mt, the highest in the world and a new all-time high since Platts began assessing the market in 2011.
**Brazilian import PP prices rose $110-$110/mt week to $2,000/mt for homopolymer and $2,050/mt for copolymer, fresh all-time highs since Platts began assessing the markets in 2011.
**March spot propylene prices plunged 17.75 cents/lb FD USG on the day March 3, while April propylene prices fell 16.75 cents/lb on the day to 59.50 cents/lb as restart efforts continued at two of three US propane dehydrogenation (PDH) units post-freeze.
https://www.spglobal.com/platts/en/market-insights/topics/appec-2020
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