Hurricane hits U.S. Gulf of Mexico plastic products installations shut down

Category 4 Hurricane Ida made landfall near the Port of Furchon, Louisiana, at noon on August 29, local time, and the roofs of some buildings in the port were torn off
.
Real-time data from the power monitoring website shows that "Ada" has caused power outages to 450,000 homes and businesses in Louisiana
.
According to the U.
S.
Geological Survey, "Ida" caused an "extremely rare" backflow of the Mississippi River, which flows from north to south into the Gulf of Mexico, near the city of New Orleans in the state, causing the port to flood and the situation is very serious
.

These severe storms and storm surges have had a major impact on U.
S.
energy supplies
.
According to the U.
S.
Energy Information Administration (EIA), more than 45 percent of U.
S.
refining capacity is located on the Gulf Coast
.
Offshore wells in the Gulf of Mexico account for 17% of U.
S.
crude oil production and 5% of natural gas production
.
As of the afternoon of the 28th, some U.
S.
offshore oil producers had shut down wells that produced about 1.
65 million barrels per day, accounting for about 91% of oil production in the Gulf of Mexico
.
About 85% of natural gas production in the Gulf of Mexico has also ceased
.
In addition, flooding and power outages in the area could also affect the main pipeline that transports gasoline to the East Coast
.
Colonial Pipeline, the operator of the fuel distribution system, said its company closed two fuel pipelines between Houston, Texas, and Greensboro, North Carolina, each 8,851 kilometers long, supplying the U.
S.
east coast.
Nearly half of gasoline and diesel consumption is one of the most important energy infrastructures in the United States
.
In addition, 288 oil and gas production platforms including BP, Chevron, Exxon Mobil, Equinor, BHP Billiton and Murphy Oil were closed and staff evacuated
.

In addition to crude oil and natural gas having a greater impact, as a very important role in the industrial chain, ethylene and propylene have been shut down a lot, and the downstream impacts are mainly PVC, PE, PP, VCM, and ethylene dichloride
.

Olefins: Current plant closures include Westlake Chemical, ExxonMobil, and Formosa Plastics' Baton Rouge plant, as well as the southern Louisiana capital, Mississippi River Dow Chemical (Dow Chemical), Shin-Etsu (Shintech), NOVA Shell (NOVA Chemical Shell), Olin and OxyChem along the coast
.
About 6.
53 million tons/year of ethylene units were shut down, accounting for about 16% of the total U.
S.
ethylene capacity of 40.
5 million tons/year
.
The propylene shutdown unit involves a production capacity of about 5 million tons per year, accounting for about 21% of the total US propylene production capacity of 24 million tons per year
.

In terms of PVC: The main PVC and vinyl chloride plants closed by the hurricane are Formosa Plastics America (513,000 tons of PVC and 650,000 tons of VCM), Westlake Chemical (860,000 tons of PVC and 720,000 tons of VCM), Shin-Etsu America (600,000 tons of PVC and 720,000 tons of VCM) tons of PVC and 1.
77 million tons of VCM), the total of PVC plants is about 1.
973 million tons per year, and the total of vinyl chloride plants is about 3.
14 million tons per year
.
The United States is a major exporter of PVC, and the closure of this plant is bound to have an impact on the global supply side
.

Polyolefins: The currently shut down units include: ExxonMobil's 400,000-ton/year HDPE, 400,000-ton/year LDPE, 900,000-ton/year LLDPE unit, and 410,000-ton/year PP unit at the Baton Rouge petrochemical plant; Dow is located at Plaquemine 750,000 t/y HDPE unit, 184,000 t/y and 350,000 t/y LDPE unit, 544,000 t/y LLDPE unit; and 750,000 t/y HDPE and 800,000 t/y at Taft petrochemical plant Year LLDPE installations
.
The affected PE devices are many, and the PP devices are relatively less affected
.
In addition, Middle Eastern producers delayed the arrival of some resources to Hong Kong due to maintenance and shipping logistics obstacles.
The recent peak downstream demand season is approaching and the import resources continue to be tight, so the new quotations from import suppliers remain firm and rising
.

Affected by Hurricane Ida, oil producers may close their refineries for 4 to 6 weeks, or even longer
.
For now, the hurricane has reduced the supply of oil and natural gas, and prices will continue to rise
.
The downstream products polyolefin and PVC will also be affected.
From the perspective of PVC, although the United States is an important import source for China, due to the high localization rate of PVC, the impact on the country will not be large.
Suspension accounts for a large proportion of the country's total production capacity, and the local PVC in the United States will have an obvious tense situation, which will attract resources from other countries, and external prices will rise
.
In terms of PE, the volume of LDPE and HDPE imported from the United States in 2020 ranks sixth, and LLDPE ranks fourth.
In addition, there are many shut-down devices, which will have an impact on exports.
The shipping time is about 60 days
.
The goods normally sent out before the hurricane will arrive at the port around the end of October
.
It is expected to mainly affect the resources in November-December
.
In terms of PP, since there are very few imported resources from the United States, it has little impact on China's resources
.
However, due to the short-term impact of the event, higher external prices are more favorable for exports
.