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

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

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

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

MOSCOW (MRC) -- Trinseo (Berwyn, Pennsylvania) has partnered with Coexpan (Madrid, Spain) to validate technologies for the production of recycled polystyrene (PS) suitable for use in form-fill-seal (FFS) dairy applications, according to Chemweek.

Using materials and input supplied by Trinseo, Coexpan will perform testing at Innotech, its innovation technology center. Trinseo and Coexpan expect industrial volumes to be in production by the third quarter of 2022.

“The dairy FFS packaging market, which has historically preferred the use of polystyrene due to its technical superiority over alternative polymers, has recently seen greater interest in alternative materials owing to misperceptions regarding the circularity and recyclability of PS,” the companies say in a joint statement. “PS offers a unique potential for not only closed-loop recycling, but also a lower carbon footprint and extended life cycle due to its simplicity and ease to fully recycle, giving polystyrene a major competitive advantage versus all alternatives.”

Coexpan, a division of Grupo Lantero, specializes in the manufacture of rigid plastic sheets and thermoformed products for the packaging industry. The company has 13 production plants in 8 countries in Europe and Latin America.

As MRC informed before, Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for all PS, acrylonitrile-butadiene-styrene (ABS) and acrylonitrile-styrene copolymer (SAN) in Europe. Effective August 1, 2020, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

- STYRON general purpose polystyrene grades (GPPS) -- by EUR30 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR30 per metric ton;
- MAGNUM ABS resins - by EUR50 per metric ton;
- TYRIL SAN resins - by EUR40 per metric ton.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 225,870 tonnes in the first half of 2020, down by 8% year on year. PS consumption increased by 2% year on year in June 2020, totalling 39,590 tonnes.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC