Hurricane Laura forced shutdowns short-lived – Olefins and Feedstocks in High Demand

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Preparations for the approach and landfall of Hurricane Laura forced the shutdown of many shipping terminals and refineries, as well as several petrochemical crackers. The reduction in productive capacity may be short-lived, but comes at a time when olefins and feedstock commodities are in high demand. US LPG loadings this month are running at a pace of 1.64 million barrels per day, and would be the highest on our records if maintained. Loadings of ethylene and propylene are both lower so far this month compared to July, however, growing demand outside of the US could prompt an increase in both commodities in coming weeks.

The propylene market has found itself in a precarious situation recently, as import demand weakened considerably due to the coronavirus. One of the few bright spots showing an increase in propylene demand this month is Brazil, whose automotive and aerospace manufacturing industries have been hard hit by the virus.  Ethylene loadings are also down from last month, with August coming in at 168,001 Mt, compared to 218,345 Mt in July. Production of single use plastics has been one factor creating ethylene demand, although the decline in loadings recently could be caused by more crackers entering service which can produce their own olefins.

Hurricane Laura closed US export terminals on Wednesday, partially reopening on Thursday, but with draught restrictions. Olefin exports may be slow to resume, as several crackers were shut down in anticipation of the storm. Four were shut in Louisiana and nearly as many in Texas. In Port Arthur, the Total and BASF joint venture had already been shut for maintenance, while the Ineos plant in La Porte, Texas, and Formosa Plastics’ unit in Point Comfort, Texas, both declared force majeure in the last two weeks.

East Asia may be most impacted by any US ethylene shipping delays, with the majority shipped to Taiwan and recently, to China.  Mexico and Colombia may be most affected by US propylene export delays. Tepeal’s Altamira terminal in Mexico and Petco’s Mamonal chemical plant in Colombia discharged all of the US cargoes this month.