Hurricane Katrina, one of the worst natural disasters in U.S. history, left the rubber industry in suspense in its immediate aftermath.
At issue is whether the petroleum, polymer and petrochemical feedstock facilities in Louisiana and Mississippi—the states that suffered the greatest devastation—could reopen quickly in the face of storm damage, power outages and possible delays in obtaining raw materials.
Natural rubber traders, meanwhile, also worked overtime to ascertain whether recently delivered orders of NR were safe. Two of the largest NR ports in the U.S. are New Orleans and Pascagoula, Miss., both directly in path of Hurricane Katrina, which made landfall Aug. 29.
Idle oil rigs, platforms
Of 32 Gulf Coast refineries, steam cracker operations and producers of butadiene, styrene, benzene and mixed xylenes, 25 either were shut or reported shut following the storm, according to Chemical Market Associates Inc., a Houston-based consulting firm. The remaining seven were operating at reduced rates or reportedly doing so.
Some 482 oil drilling platforms and 79 oil rigs in the Gulf of Mexico still were deserted as of Aug. 31, according to the Minerals Management Service of the U.S. Department of the Interior. These represent nearly 60 percent of all platforms and rigs in that area, encompassing about 91 percent of the region´s oil production and 83 percent of its natural gas production, the agency said.
Seven drilling platforms became unmoored in the storm, and oil companies tried to secure them before they crashed into the rigs.
Mark Eramo, vice president of olefins at CMAI, summed up the post-Katrina situation the way most others did: "It depends."
It is crucial that each shuttered facility resumes production as quickly as possible, according to Eramo.
"For each site, it´s a matter of whether there are the utilities available to start up, whether there´s sufficient fuel, whether they had wind or flood damage," he said. "From the standpoint of the petrochemical industry, a week´s supply interruption won´t be devastating."
Another Houston-based consultant, Jim Madden of Chemical Market Resources Inc., said the energy and economic impacts of Hurricane Katrina may not be as great as many people fear. Madden´s opinion was similar to that of White House economic advisers, who also said the effects of the storm on the general U.S. economy may end up being relatively modest.
"Based on conversations we´ve had with officials in the oil and gas industries, the damage from Hurricane Katrina may not be as significant as that from Hurricane Ivan last year," Madden said. Most petrochemical and polymer manufacturing is located in the Houston area, well away from the storm, so disruptions in those areas shouldn´t be major, he said.
But feedstock prices—once feedstocks are being produced again—will undergo a definite hike, he said.
Eramo agreed, noting feedstock prices began to rise even before the hurricane hit. Spot prices for ethylene, which stood at 45 cents per gallon on Aug. 29, rose to more than 50 cents the next day, he said.
Damage to rubber facilities light
Company officials of rubber industry manufacturers and suppliers with plants in the Gulf Coast reported spotty damage to their facilities.
DuPont reported the worst damage, declaring force majeure—the voiding of supply contracts because of acts of God—at its titanium oxide facility in DeLisle, Miss., and its First Chemical Corp. aniline plant in Pascagoula. The company´s EPDM facility in Pontchartrain, La., is "essentially OK," a DuPont spokeswoman said, despite some wind and rain damage.
Zeon Chemicals L.P. also reported limited damage to its epichlorohydrin factory in Hattiesburg, Miss.
"The plant is in good shape," said Dave Dargan, Zeon vice president of manufacturing operations. "We did have trees fall on a break area and on a trailer we were using as an office. There was also a little damage to the office area of our warehouse, but not the storage area."
The inventory of feedstocks at Hattiesburg will allow the plant to get by for a week or two without new supplies, Dargan said.
The Crompton Corp. EPDM facility in Geismar, La., came through the deluge relatively unscathed, with hopes of reopening by the end of last week, a Crompton spokeswoman said. ExxonMobil Chemical Americas´ EPDM and butyl operations in Baton Rouge also weathered the storm, a company spokesman said, but feedstock availability would determine when it reopens.
DSM Copolymer Inc.´s Baton Rouge styrene-butadiene rubber plant and its employees survived the hurricane unscathed, according to a DSM executive. Management closed the site before the storm hit and started bringing it back on line soon after.
The executive said the rubber industry faces some uncertainty because of the shutdown of feedstock production, as well as the interruption of rail and trucking in the flooded areas.
The Firestone Polymers Inc. SBR and polybutadiene plant in Lake Charles, La., was west of the storm and also came through without damage, according to a Bridgestone/Firestone spokesman.
NR on barges safe
Anecdotal evidence from New Orleans suggests most of the natural rubber stored on barges in the port, waiting for unloading, came through the hurricane safely. NR warehoused in New Orleans, on the other hand, was a question mark.
Pascagoula has superseded New Orleans as the major NR port in the U.S., traders said, and lack of word from there was especially nerve-racking to traders.
A newsletter from rubber trader RCMA Americas Inc. said the company is redirecting NR shipments to the East Coast, but extra volume in those ports will make shipping tricky. RCMA urged customers to make their NR orders earlier than usual. "We have said this a million times, but you cannot wait until the last moment to buy, especially in this market," the company said.
Among tire manufacturers, Goodyear said that it took care to store enough NR, SR and carbon black before the storm.
Goodyear now uses Morehead City, N.C., as its main NR port, a spokesman said.
Michelin also reported few disruptions because of the hurricane.
"We did divert two shipments of natural rubber to a different port, but otherwise there have been no problems," a spokeswoman said.
The fate of rubber product manufacturers and distributors in the region hit by the hurricane was unknown at presstime, since phone service remained out.