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Asia petrochemicals brace for impact as Hurricane Ida forces US outages

Author: Nurluqman Suratman

2021/08/30

SINGAPORE (ICIS)–Selected petrochemical markets in Asia are bracing for tighter supply due to plant outages in the US Gulf Coast triggered by Hurricane Ida.

Any immediate impact on chemical trades between the US and Asia, however, may be limited given high freight costs amid prevailing shortage of vessels.

Ida made landfall near Port Fourchon in Louisiana as a powerful Category 4 hurricane, with winds of 155 miles per hour and is continuing northward as a Category 2 storm, according to the latest advisory by the US National Hurricane Center (NHC) at 22:00 central time (03:00 GMT).

The arrival of Ida forced the closure of several major chemical plants in Louisiana, while ports threatened by the storm have either shut or restricted operations.

In Asia’s orthoxylene (OX) market, US demand is projected to increase going forward as supply is expected to tighten after Ida’s arrival.

In the benzene market, activity was more brisk early on Monday as some traders re-positioned themselves against potential impact of the hurricane on US chemical output.

“The market is firmer as players await more news on the impact of Ida on US production,” said a broker in South Korea.

For monoethylene glycol (MEG), spot discussions in Asia were higher with China’s futures market surging by more than 2% in early trade amid concerns of tighter supply in the wake of hurricane-related outages in the US.

For the polymeric and monomeric methylene diphenyl diisocyanate (PMDI, MDI) markets, any impact on Asian trade remains to be seen.

Cargo availability in the US is set to come under further pressure after BASF shut down units in Geismar, Louisiana.

In the polyvinyl chloride (PVC) market, the US shutdowns will further tighten global supply, with Asian cargoes likely to continue flowing into the Middle East.

US PVC exports to the Middle East and Asia have been constrained for much of 2021, as major US producers have been affected by weather-related issues since early in the year.

For acrylonitrile (ACN), the arbitrage window from the US had been closed even before Hurricane Ida. Major US producer Cornerstone has shut its plant in Louisiana ahead of the hurricane’s arrival.

Spot ACN prices in the US have risen recently due to cost pressure amid spikes in values of feedstock propylene. Current export prices were deemed unworkable for the Asian market.

Regional market players have been expecting fewer spot ACN cargoes in the near term.

Contract volumes to Asia are largely from INEOS Nitriles, whose production so far has not yet been affected.

Asian ACN prices have been stable to firmer supported by tight spot supply, plant issues and upcoming turnarounds.

IDA WEAKENING BUT THREATS REMAIN
The US’ NHC warned that “catastrophic storm surge, extreme winds and flash flooding” are set to continue in portions of southeastern Louisiana.

“The centre of Ida will move farther inland over southeastern Louisiana
tonight,” NHC said.

“Ida is then forecast to move well inland over portions of western Mississippi Monday and Monday night, and move across the Tennessee Valley on Tuesday,” it said.

Some 996,495 power outages were reported across Louisiana as of 03:45 GMT on Monday while in neighbouring Mississippi, 45,497power outages were reported, according to PowerOutage.US.

Around 96% of oil production and 94% of gas production in the Gulf of Mexico has been shut in due to the arrival of Ida as of 29 August, according to the US Bureau of Safety and Environmental Enforcement (BSEE).

Oil and gas operators have evacuated 288 platforms, some 51.43% of the 560 manned platforms in the Gulf of Mexico.

As of 04:45 GMT, oil prices were trading mixed with Brent crude 12 cents higher at $72.82/bbl and US WTI crude down 2 cents at $68.54/bbl.

LOUISIANA PLANT SHUTDOWNS (AS OF 01:30 GMT)

CompanySiteProductsStatusDate
Formosa PlasticsBaton Rouge, LouisianaPVC, VCMShut down29-Aug
ExxonMobil adjusts US Baton Rouge ops, shut some units on IdaBaton Rouge, LouisianaOlefins, aromatics, IPA, polyolefins, base oilsShut down29-Aug
ExxonMobil adjusts US Baton Rouge ops, shut some units on IdaBaton Rouge, LouisianaOlefins, aromatics, IPA, polyolefins, base oilsCurtailment29-Aug
WestlakeGeismar, LouisianaCaustic Soda, EDC, PVC, VCMShut down29-Aug
WestlakePlaquemine, LouisianaCaustic Soda, EDC, PVC, VCMShut down29-Aug
DowTaft, LouisianaOlefins, acetic acid, acrylic acid, acrylic acid esters, ethanolamines, EO, glycol ethers, LLDPEShutdown29-Aug
DowPlaquemine, LouisianaOlefins, aromatics, EO, glycol ethers, LDPE, LLDPE, PG, POShut down29-Aug
BASFGeismar, LouisianaBDO, EO, MDI, TDI, polyolsShut down28-Aug
Phillips 66Belle Chasse, LouisianaRefined products, aromatics, propyleneShut down27-Aug
ShellNorco, LouisianaOlefinsShut down27-Aug
ShellGeismar, LouisianaLAO, EG, EO, linear alcohols, glycol ethersShut down27-Aug
CornerstoneWaggaman, LouisianaACN, melamineShut down27-Aug

With additional reporting by Li Li Chng, Jasmine Khoo, Jonathan Chou, Samuel Wong, Judith Wang and Clive Ong

Focus article by Nurluqman Suratman

https://www.icis.com/explore/resources/news/2021/08/30/10679519/asia-petrochemicals-brace-for-impact-as-hurricane-ida-forces-us-outages