The Urethane Blog
February 18, 2021
Dow Inc seeks buyers for German chemical parks infrastructure: sources
FRANKFURT (Reuters) – U.S. chemicals maker Dow Inc has put German infrastructure assets up for sale in a potential 800 million euro ($966 million) deal as it seeks cash for investment elsewhere, sources close to the matter told Reuters.FILE PHOTO: A Dow sign is seen at the third China International Import Expo (CIIE) in Shanghai, China November 5, 2020. REUTERS/Aly Song
Chief Executive James Fitterling last month said that Dow would continue to offload infrastructure companies from its balance sheet and make use of the funds for capex, smaller acquisitions or share buybacks.
While Dow would sell the infrastructure at petrochemicals sites in Stade, Schkopau und Boehlen, it would continue to produce plastics and intermediates there, paying usage fees to the new owner. Dow is the main user but not the only one operating in the three chemical parks.
Chemical parks typically provide infrastructure for the likes of electricity, steam, natural gas and other services to resident producers.
“Dow has informed employees in Germany that it is exploring opportunities related to certain site infrastructure assets and services at its Stade, Schkopau and Boehlen sites, but no final decision has been made”, a company spokesman said.
In a similar deal in 2019, Bayer and Lanxess sold integrated chemical site operator Currenta to Macquarie in a 3.5 billion euro deal.
Dow has sent out information packages to prospective bidders including KKR, Blackstone, BlackRock, Brookfield Asset Management, Macquarie, First Sentier and DIF Capital Partners, the sources said.
The business is being marketed with an annual sales figure of 300 million euros with core profit of about 65 million euros.
Bidders could value the infrastructure assets at about 12-13 times core earnings, the sources added.
Dow is working with Morgan Stanley on the divestiture the sources said.
February 18, 2021
US: Consumers went on an Unexpected Rampage in January
Dan North | February 17, 2021 The US consumer came roaring back with a vengeance in January as retail sales sky-rocketed 5.3% m/m, far beyond expectations of 1.2%. It was the first gain after three consecutive months of losses. Outside of the pandemic, it was the third-largest monthly gain ever, and it was the largest gain since October 2001, the month after the 9/11 attacks. Of the 15 categories reporting for December, there wasn’t a single decline.
Unquestionably, the $600 direct checks from the December stimulus bill fueled the spending.
We have been predicting for some time that over the next few months as COVID becomes more under control and the weather gets warmer, consumers will unleash all of the trillions of dollars of excess savings they will have and go on a huge spending spree. It appears that this was the first round of spending, but it’s probably just the beginning.
To recap the stimulus programs, in April the CARES act sent out $1,200 checks totaling around $300B, and in December 2020 the next round of stimulus sent out $600 checks totaling $166B. In addition to those direct payments, there have also been huge extra unemployment benefits paid since April. As a result, from April through December of 2020, Americans have saved up approximately $1.5T in excess savings, waiting to be unleashed. Apparently, this latest round of stimulus checks burst the dam, as consumers flooded the economy with $568B of speeding on retail goods and services.
And there’s more to come! Sometime over the next month, President Biden’s $1.9T American Rescue Plan (ARP) will be passed which will include yet a third round of direct payments in the form of $1,400 checks, in addition to extended unemployment benefits. Certainly, income support is needed for those who are still unemployed because of COVID. But given Feb. 17th’s report, perhaps it would be wise to put a pause on the direct payments to see if consumers will continue to spend enough of those excess savings to boost the economy. After all, the government could always provide more stimulus later if needed. Two other arguments for a pause are that there are now signs of inflation bubbling up in the economy, and of course, those direct payments will add to the debt load. But it’s highly unlikely that a pause will even be considered.
Retail sales since before COVID have made a remarkable comeback in most categories, but of course bars and restaurants have been left behind.
We would like to think that Feb. 17th’s report is the first sign of our scenario coming to fruition.
February 18, 2021
US: Consumers went on an Unexpected Rampage in January
Dan North | February 17, 2021 The US consumer came roaring back with a vengeance in January as retail sales sky-rocketed 5.3% m/m, far beyond expectations of 1.2%. It was the first gain after three consecutive months of losses. Outside of the pandemic, it was the third-largest monthly gain ever, and it was the largest gain since October 2001, the month after the 9/11 attacks. Of the 15 categories reporting for December, there wasn’t a single decline.
Unquestionably, the $600 direct checks from the December stimulus bill fueled the spending.
We have been predicting for some time that over the next few months as COVID becomes more under control and the weather gets warmer, consumers will unleash all of the trillions of dollars of excess savings they will have and go on a huge spending spree. It appears that this was the first round of spending, but it’s probably just the beginning.
To recap the stimulus programs, in April the CARES act sent out $1,200 checks totaling around $300B, and in December 2020 the next round of stimulus sent out $600 checks totaling $166B. In addition to those direct payments, there have also been huge extra unemployment benefits paid since April. As a result, from April through December of 2020, Americans have saved up approximately $1.5T in excess savings, waiting to be unleashed. Apparently, this latest round of stimulus checks burst the dam, as consumers flooded the economy with $568B of speeding on retail goods and services.
And there’s more to come! Sometime over the next month, President Biden’s $1.9T American Rescue Plan (ARP) will be passed which will include yet a third round of direct payments in the form of $1,400 checks, in addition to extended unemployment benefits. Certainly, income support is needed for those who are still unemployed because of COVID. But given Feb. 17th’s report, perhaps it would be wise to put a pause on the direct payments to see if consumers will continue to spend enough of those excess savings to boost the economy. After all, the government could always provide more stimulus later if needed. Two other arguments for a pause are that there are now signs of inflation bubbling up in the economy, and of course, those direct payments will add to the debt load. But it’s highly unlikely that a pause will even be considered.
Retail sales since before COVID have made a remarkable comeback in most categories, but of course bars and restaurants have been left behind.
We would like to think that Feb. 17th’s report is the first sign of our scenario coming to fruition.
February 18, 2021
More Bad News for Polyols–All U.S. Propylene Oxide Production Sites Affected By Freeze
FACTBOX: More petrochemical shutdowns emerge on US Gulf Coast deep freeze
Houston — Temperatures along the Texas Coast inched above freezing early Feb. 17, but numerous petrochemical plants remained shut down amid continued widespread power outages as well as a lack of running water in some areas.
“We don’t know all the implications,” a producer source said. “We’re not going to know for at least a couple of days. It’s going to affect the whole industry.”
The freeze brought sub-freezing temperatures to a region packed with infrastructure that is not built to handle such sustained cold. Temperatures fell hard amid freezing rain the afternoon of Feb. 14 and remained below freezing for at least 48 hours, leaving roads and bridges iced and millions of customers throughout Texas without electric power.
News of more shutdowns of plants along the Houston Ship Channel and Sabine-Neches Waterway emerged Feb. 17 as producers grappled with lack of power, water and snarled supply chains.
Market sources expect prices for polymers and some olefins, which had already reached record highs amid tight supply as producers navigated the coronavirus pandemic, to spike further on the freeze-related disruptions and uncertainty.
Here is a rundown of confirmed fallout from the freeze:
FORCE MAJEURES
**LyondellBasell: Declared Feb. 15 on US polyethylene
**Flint Hills Resources: Declared Feb. 15 on polypropylene produced at Longview, Texas
**Olin: Declared Feb. 16 on US chlorine, caustic soda, ethylene dichloride, epoxy, hydrochloric acid and other products produced at its Freeport, Texas, complex.
**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
**Braskem: 360,000 mt/year PP Freeport, Texas; 475,000 mt/year PP La Porte, Texas; 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: Port Neches, Texas, 235,867 mt/year cracker, 1 million mt/year ethylene oxide/monoethylene glycol 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.
**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: Entire Point Comfort, Texas, complex, 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; two PP units with combined capacity of 1.7 million mt/year; 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.
**ExxonMobil: Baytown, Texas, refining and chemical complex, including three crackers with a combined capacity of 3.8 million mt/year; 800,000 mt/year PP
**ExxonMobil: Beaumont, Texas, refining and chemical complex, including an 826,000 mt/year cracker; 225,000 mt/year HDPE; 240,000 mt/year LDPE; 1.19 million mt/year LLDPE with some HDPE capacity
**Dow Chemical: Certain units offline within Dow sites along the US Gulf Coast, but the company did not specify. Dow’s Gulf Coast operations include a complex at Freeport, Texas, with three crackers able to produce a combined 3.2 million mt/year, 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
**TPC Group: Houston site shut down, including 544,310 mt/year butadiene unit, when boilers lost steam
**Motiva Chemicals: Port Arthur, 635,000 mt/year mixed-feed cracker
**Shell: Deer Park, Texas, refining and chemical complex, including two crackers with a combined 961,000 mt/year of capacity
**Shell: Norco, Louisiana, refining and chemical complex, including two crackers with a combined capacity of 1.42 million mt/year
**Chevron Phillips Chemical: Pasadena, Texas, 998,000 mt/year HDPE
PRICES
**In the West Coast of South America, polypropylene CFR import prices were up $80/mt on the week for homopolymer at $1,780/mt, and up $50/mt for copolymer grades, assessed at $1,800/mt with US export PP availability already largely nil for months before numerous plant shutdowns amid the freeze
**US polymer prices held steady amid muted activity
PORTS AND RAILROADS
**Houston Ship Channel: shut mid-afternoon Feb. 14; reopened Feb. 16 until late afternoon; reopened morning of Feb. 17
**Sabine Pass: port shut mid-afternoon Feb. 14, resumed inbound traffic midday Feb. 16, shut Feb. 17
**Corpus Christi: port shut Feb. 14, resumed boarding vessels Feb. 16 until late evening when shut again per weather; resumed boarding midday Feb. 17
**Union Pacific advised customers Feb. 16 that more than 400 locations across its network were without power, and more than 20% of active trains were holding at least four hours because of weather conditions. Impacts were expected to last through Feb. 18.
**BNSF Railway advised customers on Feb. 16 that many trains in Texas were holding due to widespread power outages and road closures that affected movement of train crews and other personnel, and delays in shipments were expected to last until conditions improve.
February 18, 2021
More Bad News for Polyols–All U.S. Propylene Oxide Production Sites Affected By Freeze
FACTBOX: More petrochemical shutdowns emerge on US Gulf Coast deep freeze
Houston — Temperatures along the Texas Coast inched above freezing early Feb. 17, but numerous petrochemical plants remained shut down amid continued widespread power outages as well as a lack of running water in some areas.
“We don’t know all the implications,” a producer source said. “We’re not going to know for at least a couple of days. It’s going to affect the whole industry.”
The freeze brought sub-freezing temperatures to a region packed with infrastructure that is not built to handle such sustained cold. Temperatures fell hard amid freezing rain the afternoon of Feb. 14 and remained below freezing for at least 48 hours, leaving roads and bridges iced and millions of customers throughout Texas without electric power.
News of more shutdowns of plants along the Houston Ship Channel and Sabine-Neches Waterway emerged Feb. 17 as producers grappled with lack of power, water and snarled supply chains.
Market sources expect prices for polymers and some olefins, which had already reached record highs amid tight supply as producers navigated the coronavirus pandemic, to spike further on the freeze-related disruptions and uncertainty.
Here is a rundown of confirmed fallout from the freeze:
FORCE MAJEURES
**LyondellBasell: Declared Feb. 15 on US polyethylene
**Flint Hills Resources: Declared Feb. 15 on polypropylene produced at Longview, Texas
**Olin: Declared Feb. 16 on US chlorine, caustic soda, ethylene dichloride, epoxy, hydrochloric acid and other products produced at its Freeport, Texas, complex.
**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
**Braskem: 360,000 mt/year PP Freeport, Texas; 475,000 mt/year PP La Porte, Texas; 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: Port Neches, Texas, 235,867 mt/year cracker, 1 million mt/year ethylene oxide/monoethylene glycol 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.
**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: Entire Point Comfort, Texas, complex, 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; two PP units with combined capacity of 1.7 million mt/year; 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.
**ExxonMobil: Baytown, Texas, refining and chemical complex, including three crackers with a combined capacity of 3.8 million mt/year; 800,000 mt/year PP
**ExxonMobil: Beaumont, Texas, refining and chemical complex, including an 826,000 mt/year cracker; 225,000 mt/year HDPE; 240,000 mt/year LDPE; 1.19 million mt/year LLDPE with some HDPE capacity
**Dow Chemical: Certain units offline within Dow sites along the US Gulf Coast, but the company did not specify. Dow’s Gulf Coast operations include a complex at Freeport, Texas, with three crackers able to produce a combined 3.2 million mt/year, 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
**TPC Group: Houston site shut down, including 544,310 mt/year butadiene unit, when boilers lost steam
**Motiva Chemicals: Port Arthur, 635,000 mt/year mixed-feed cracker
**Shell: Deer Park, Texas, refining and chemical complex, including two crackers with a combined 961,000 mt/year of capacity
**Shell: Norco, Louisiana, refining and chemical complex, including two crackers with a combined capacity of 1.42 million mt/year
**Chevron Phillips Chemical: Pasadena, Texas, 998,000 mt/year HDPE
PRICES
**In the West Coast of South America, polypropylene CFR import prices were up $80/mt on the week for homopolymer at $1,780/mt, and up $50/mt for copolymer grades, assessed at $1,800/mt with US export PP availability already largely nil for months before numerous plant shutdowns amid the freeze
**US polymer prices held steady amid muted activity
PORTS AND RAILROADS
**Houston Ship Channel: shut mid-afternoon Feb. 14; reopened Feb. 16 until late afternoon; reopened morning of Feb. 17
**Sabine Pass: port shut mid-afternoon Feb. 14, resumed inbound traffic midday Feb. 16, shut Feb. 17
**Corpus Christi: port shut Feb. 14, resumed boarding vessels Feb. 16 until late evening when shut again per weather; resumed boarding midday Feb. 17
**Union Pacific advised customers Feb. 16 that more than 400 locations across its network were without power, and more than 20% of active trains were holding at least four hours because of weather conditions. Impacts were expected to last through Feb. 18.
**BNSF Railway advised customers on Feb. 16 that many trains in Texas were holding due to widespread power outages and road closures that affected movement of train crews and other personnel, and delays in shipments were expected to last until conditions improve.
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