Extreme cold and record-breaking snowfall along the U.S. Gulf Coast Jan. 21 and 22 have prompted shutdowns and weather emergencies for chemical producers in the region.
Some plants shut down in advance of the winter blast.
In a report, Mark Woods, president of Ethylene Strategies International in Spring, Texas, said the event termed Winter Storm Enzo will double unplanned outages for ethylene and polyethylene, taking them to 18 percent for ethylene and 8-10 percent for PE. As a result, Woods added that operating rates for PE will be as low as 80 percent in January after running at 90 percent in the fourth quarter of 2024.
ESI then expects "a strong turnaround season" between March and May that will keep utilization rates in the mid to high 80s, tightening the market.
Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston, said in an email that the January weather issues, together with deep turnarounds, may help PE makers.
PE demand "is not necessarily going to improve in the near future, so tighter supplies can help support PE prices," he added. "The PE-to-ethylene spread already has tightened."
"It had been abnormally high, something that was not the usual case for the industry. A tighter spread allows producers to exert better control over PE prices. Sales people can't agree to lower prices, if their margins aren't there."
Data firm ICIS said in a Jan. 21 report that some chemical companies had existing staff stay on site to continue operations due to poor travel conditions for other shift workers.
Temperatures reached freezing on Jan. 19 and continued to fall, dipping into the single digits in some locations. Areas near Baton Rouge, La., dropped to 3 degrees, its coldest temperature on record.
Snow that accompanied the cold dropped 6 inches at La Porte, Texas, 11.5 inches in Louisiana's St. Bernard Parish and more than 7 inches in Pensacola, Fla. The 8 inches recorded at the airport in New Orleans blasted past the previous record of 2.7 inches.
Houston airports were not expected to reopen to incoming flights until mid-morning on Jan. 22 while airlines operating at Louis Armstrong International Airport in New Orleans had not yet rescheduled flights as of the morning of Jan. 22. The Port of Houston was closed both Jan. 21 and Jan. 22.
At least two companies contacted by Plastics News, Westlake Chemical Corp. and Shintech Inc., said operations continued as normal as of Jan. 21.
In an email to PN, a spokesperson for Dow Inc. in Midland, Mich., said that the firm's Gulf Coast manufacturing sites "have managed well, with minimal disruption to some production units." The spokesperson added that Dow's extreme weather teams "remain on site to ensure safe and reliable operations."
A spokesperson for Chevron Phillips Chemical Co. in Houston declined to comment on specific production sites, but said that, in preparation for the weather, the firm "implemented established protocols for responsibly securing our facilities."
"Until recently, temperatures rarely fell below freezing along the Gulf Coast, so it was unlikely that chemical companies designed their plants to be more resilient during frigid weather," Houston-based ICIS said. "Since 2021, freezes have become annual events along the Gulf Coast, and companies have started taking precautions."
The report added that even if plants avoid damage from cold weather, they could still shut down if they lose power or natural gas. If the forecasts for sleet and snow are accurate, the cold temperatures could cause power lines to snap.