Texas Polar Storm: How It Has Affected The US Chemical Industry

March 16, 2021

The polar storm that struck Texas ceased 90% of the United States polypropylene capacity, 67% of ethylene, and shut down production of other important chemicals. The Gulf Coast, home to many refineries and chemical plants, was hit by severe power and feedstock outages brought forth by harsh winter weather. Several facilities experienced disruptions and declared ‘force majeure’ on operations. Logistics networks were disrupted, people took to panic-buying, and global market prices of chemicals sky-rocketed.

A Dow spokesperson confirmed that ‘certain units along the US Gulf Coast ‘ shut down due to severe weather conditions. INEOS, LyondellBasell, ExxonMobil, Total, Formosa, and Braskem declared force majeure or implemented sales allocations on polypropylene products. 

In terms of volume, ethylene manufacturers were hit the hardest as 26 million tonnes of capacity were shut down. 11 million tonnes of propylene capacity, amounting to 50% of the total capacity, also went offline.  Production was curtailed across oil refineries in this region. Speaking in percentages, the worst-hit commodities were propylene oxide, epichlorohydrin, and toluene diisocyanate, with production being shut down completely. Also, production of ethylene glycol (90% of US capacity offline), polypropylene (90%), propylene glycol (88%), acrylonitrile (73%), and styrene-butadiene rubber (71%) dropped accordingly. 

Over 80–90% of the US toluene, benzene, and xylenes capacity are confined to the region affected by the polar storm, and most of it was either shut down or operated at low rates. Markets for aromatic solvents suffered as a result. 

In the backdrop of a tight global market brought about by chaos in container shipping, COVID-19 related recession, and other factors, the recent outages aggravated the situation. An acute shortage of materials disrupted supply chains and led to soaring prices. As mentioned earlier, polypropylene and propylene are anticipated to be severely affected as the market was already reeling under a pandemic-driven reduction in demand. 

These closures had an indirect effect on polypropylene and propylene supply and led to a surge in prices. As US propylene production is concentrated on the Gulf Coast, even a minor temporary constraint has a massive effect on the market. Consequently, US propylene supply halved compared to last year, and the prices reached a ten-year high. Polypropylene inventories in the country dropped as a result of limited monomer availability and recovering demand. 

The ice storm curbed the supply of methyl methacrylate in the US as production plants in Texas shut down. Feedstock acetone took a hit as severe constraints limited production. Some suppliers have begun to levy temporary surcharges on the solvent. 

In the meantime, demand for chemicals has relatively improved in China. Future prices for styrene, polyester, mono ethylene glycol have risen in the country that has been called the world’s largest chemicals market.

Gradually, these issues are being resolved and companies are focussing on the process of restarting plants and refineries. Chemical supply companies face the task of conducting thorough checks on their machinery and equipment to get the official certification to resume operations.  A return to normal production will mainly depend on the damage assessment reports and feedstock availability. 

California Chemicals, one of the leading chemical distributors in California, has successfully made high-quality products accessible to the broader community. Reach out to us for any inquiries about chemical supply and management.

Latest Blogs

NEVADA

SEATTLE

TEXAS

OHIO

IDAHO

MONTANA

CHICAGO

HAWAII

GEORGIA

NEW YORK

NEW JERSEY

BOSTON

CALIFORNIA

ARIZONA

FLORIDA

MICHIGAN

PENNSYLVANIA

ALASKA

ILLINOIS

COLORADO

WASHINGTON

CAROLINA

VIRGINIA

INDIANA

MINNESOTA

OREGON

MASSACHUSETTS

WISCONSIN

TENNESSEE

ALABAMA

MISSOURI

LOUISIANA

IOWA

UTAH

CONNECTICUT

MAINE

KENTUCKY

KANSAS

WYOMING

ARKANSAS

MORE..