MOSCOW (MRC) – Last month’s winter storm paralyzed the US petrochemical industry, said Hydrocarbonprocessing.
Operations at US Gulf Coast petrochemical facilities have yet to fully recover one month after freezing temperatures triggered wide-spread power outages and plant shutdowns. Wood Mackenzie’s olefins, polyolefins, paraxylene and purified terephthalic acid (PTA) experts look at ongoing disruptions and what they mean for the country’s petrochemical operations and supply chains.
More than 80% of US olefins capacity was immediately offline following the peak of extreme weather conditions in mid-February. During that time, Wood Mackenzie noted it could take weeks to recover given that disruptions across the value chain would lead to a staggered and complex restart, setting the stage for volatility in supply and prices amid stronger demand.
As of mid-March, the US olefins industry has yet to regain its footing with only 60% of capacity back in operation, according to data from Genscape, a Wood Mackenzie company. Several facilities in both the Houston and Corpus Christi metropolitan areas remain shut. Those further west appear to be experiencing longer outages, likely due to encountering relatively colder temperatures during the winter storm.
While the supply of these important chemical building blocks dropped during outages, demand for their end-use products has not. Ethylene prices have responded to this imbalance by reaching almost seven-year highs, according to Wood Mackenzie’s price history. Polymer grade propylene prices touched all-time highs immediately following the freeze but have since fallen and stabilized at near three-year highs. High olefin prices are expected to continue after the restart process is fully complete as the units work through a backlog of pent-up derivative demand.
During January, chemical production grew across all regions. Headline global production was up 9.5% year-over-year (Y/Y) on a three-month moving average (3MMA) basis. Global output stood at 129.0% of its average 2012 levels. Output was down a year ago due to the onset of the COVID-19 pandemic.
As MRC informed earlier, sales of high density polyethylene (LDPE) in the United States and Canada rose 3.8% in January 2021 compared to the same month a year earlier. While the production of LDPE grew by 5.2% over the same period of time. Total sales increased by 2.3%, despite a 0.7% decline in export sales.
At the same time, high-density polyethylene (HDPE) sales in the United States and Canada were up 5% in January 2021 from the same month in the prior year. HDPE production increased by 1% over the same period. Domestic demand for HDPE has strengthened in recent months as demand for consumer durables has been strong since the second half of 2020 amid continued growth in manufacturing activity in the United States.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC