Sasol declares force majeure on LLDPE, HDPE after Hurricane Laura

MOSCOW (MRC) -- Sasol Chemicals North America declared force majeure on all polyethylene (PE) products Aug. 31, including linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) grades at their Texas and Louisiana manufacturers in light of Hurricane Laura's assault on Aug. 27, according to a letter to customers obtained by S&P Global.

Sasol's Lake Charles, Louisiana complex is home to 470,000 mt/year LLDPE plant that started up in February 2019 and a 420,000 mt/year low density polyethylene (LDPE) unit that was damaged by fire during commissioning in January and has remained shut for repairs.

"Sasol's Lake Charles Chemical Complex shut down on Aug. 25 in anticipation of the storm," the letter said.

"Many of the company's employees and contractors followed the mandatory evacuation order and have not been able to return yet, the letter stated.

"At this time, the damage and impact on a restart-schedule is being assessed," and the company is working toward restoring its operations to normal levels, the letter stated.

The company was not available for immediate comment at the time of publication.

Earlier on Aug. 31, the company posted an update on its website that said the storm caused widespread electrical blackouts and other damage, preventing Sasol from operating most utility systems.

"High voltage transmission line corridors into the Lake Charles area are damaged, and the full assessment is still in progress by a local power company," the company's statement said, referring to Entergy.

The company said further that operations recovery crews were assessing damage at the Lake Charles site and early reports indicated no apparent damage to process equipment and no flooding damage was seen as a result of storm surge.

"Start-up of the plants will depend on the availability of electricity, industrial gases, other feedstocks and the restoration process. We are engaging with our customers and suppliers regularly regarding the impacts on production,' the company said.

In general, polyethylene market participants anticipated the declaration as Hurricane Laura directly hit Lake Charles, which caused extreme power outages and damages in some areas and is home to a handful of petrochemical plants.

Producers are still assessing how much production was lost from the hurricane and are uncertain of what to expect in the coming week, one trader source said.

As MRC reported before, Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of Lake Charles Chemicals Project (LCCP), is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to the company's six new derivative units at its Lake Charles multi-asset site.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

Westlake Chemical declares force majeure on VCM, PVC after Hurricane Laura

MOSCOW (MRC) -- Westlake Chemical declared force majeure Aug. 31 on North American polyvinyl chloride (PVC) and upstream vinyl chloride monomer (VCM), with widespread power outages and damage at its Lake Charles, Louisiana, complex leaving production offline for an indefinite amount of time, according to a letter to customers S&P Global obtained.

"At this time, we are not able to predict the duration of this force majeure condition," the Westlake's letter dated Aug. 31 said.

"This force majeure condition will cause supply disruptions and limit our ability to meet anticipated product demand. While this force majeure event declaration is required at this time, Westlake/Axiall is continuing to work on commercial options to lessen the impact on our customers."

Market participants expected the declaration. Westlake's shutdown of its Lake Charles complex has idled 38% of its US VCM production with two VCM plants with a combined capacity of 952,318 mt/year offline.

The complex also has three upstream chlor-alkali plants with a combined capacity of 1.27 million mt/year of chlorine and 1.36 million mt/year of caustic soda - 46% of the company's overall North American chlor-alkali capacity.

The company said on Aug. 27, hours after Hurricane Laura came ashore with 150 mph winds, that it appeared its Lake Charles complex had "incurred limited physical damage."

Spokeswoman Erika Soechting reiterated that assessment in an email Aug. 31, before the FM letter began circulating, that restarts would primarily depend on the availability of electric power, industrial gases, and other feedstocks.

However, a source familiar with company operations said wind damage appeared to be more serious than initially thought upon further assessments. No further detail was available.

Westlake's FM will sharply tighten already tight PVC availability.

Formosa Plastics Aug. 14 declared FM on PVC at both its Texas and Louisiana complexes because a turnaround at its 736,000 mt/year chlor-alkali plant in Point Comfort, Texas, lasted longer than expected. Even though the chlor-alkali plant had restarted the week of Aug. 10, the company's downstream ethylene dichloride reserves were depleted, reducing its ability to produce adequate PVC further downstream.

Formosa's FM remained in place Aug. 31 as the company worked to replenish those EDC reserves and restore normal PVC output.

Export PVC availability already had been tight with Formosa's chlor-alkali turnaround that started in mid-June and a turnaround at its 513,000 mt/year PVC plant in Baton Rouge, Louisiana, in July.

In addition, domestic PVC demand has strengthened significantly since catering in April amid widespread coronavirus pandemic-related shutdowns.

Formosa and Westlake already had not expected to offer export volumes for September - Formosa because of its FM, and Westlake because of domestic demand. US PVC producers also had not resumed fully normal rates since reducing output in April, with chlor-alkali rates at 75% in July.

As MRC reported earlier, in February 2018, as MRC informed before, Westlake Chemical announced plans to expand its capacities for the production of PVC and VCM at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
MRC

US emergency oil reserve site suffers "considerable" damage from Hurricane Laura

MOSCOW (MRC) -- The US Energy Department said that the West Hackberry site of the Strategic Petroleum Reserve “sustained considerable damage” from Hurricane Laura and that detailed estimates of the harm done should be out later this week, reported Reuters.

The department shut two of the four SPR sites ahead of Laura and the other site, in Big Hill, Texas is back up and fully operational, it said. The West Hackberry is without access to commercial power. “There is no threat to the integrity of the geologically sealed underground caverns, and no danger of contamination or concern for spills,” a department official said.

As MRC wrote previously, most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border last Wednesday night or early Thursday. Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and PP.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Restoring power to Phillips 66 Lake Charles refinery may take three weeks

MOSCOW (MRC) -- Restoring electricity to the Phillips 66’s 260,000 barrel-per-day (bpd) Lake Charles, Louisiana, refinery could take up to three weeks, reported Reuters with reference to sources familiar with plant operations.

The refinery was shut on Aug. 25 as Hurricane Laura was forecast to make landfall southwest of Lake Charles. Laura, packing winds of 150 miles per hour (241 kmh) passed over the Lake Charles area on Thursday.

“Phillips 66 does not comment on rumors or speculation,” the company said in an emailed statement.

Local power provider Entergy said on Monday that the seven power-line corridors to Lake Charles received catastrophic damage from Laura.

Phillips 66 is performing assessments of the Lake Charles refinery and chemical plant complex, which is located in Westlake, Louisiana. The assessments were hampered for at least two days by a chemical fire at a nearby plant, the sources said.

As MRC informed before, last month, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Mitsubishi Forms Alliance with Refinverse In Efforts to Pursue a Circular Economy

MOSCOW (MRC) -- Mitsubishi Chemical Corp. (MCC), as part of its efforts to pursue a circular economy, has entered into a capital and business alliance with Refinverse, operator of an industrial waste collection, treatment and recycling business, according to Apic-online.

Refinverse, which started out collecting and transporting construction-related waste for treatment, has built an integrated system extending from waste treatment to production of resin, thereby supplying a diverse range of recycled resources.

The alliance will enable MCC to combine Refinverse's know-how regarding all aspects of industrial waste with its own technologies and knowledge to promote appropriate recycling and effective use of waste.

It will also allow MCC to further its understanding of final disposal methods for its products and leverage that understanding to design materials that are more environmentally friendly, MCC explained.

Refinverse has granted stock to MCC through third-party allotment to raise capital, and the two companies have signed an outsourcing agreement.

Accordingly, on 1 Apr. 2020, MCC established a Circular Economy Dept. to promote the proposal and commercialization of solutions relating to the circular economy and proactively pursuing tie-ups with external parties including customers, academic institutions and start-ups to contribute to the creation of a sustainable society.

As MRC reported earlier, Mitsubishi Chemical's naphtha cracker has being operating normally following a planned outage. The company resumed operations at the cracker on July 7, 2020. The cracker was shut for maintenance on May 9, 2020. Located at Kashima, Japan, the cracker has an ethylene production capacity of 540,000 mt/year and a propylene capacity of 270,000 mt/year.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC