Hurricane could tighten US styrenics spot market

29 August 2008 21:12  [Source: ICIS news]

HOUSTON (ICIS news)--Hurricane Gustav could disrupt the US styrenics market if Total is forced to shut down its facility in Carville, Louisiana, sources said on Friday.

The site has a capacity of 1.16m tonnes/year of styrene monomer (SM) and 770,000 tonnes/year of polystyrene (PS), according to global chemical market intelligence service ICIS pricing.

The site is located along the Mississippi river about 60 miles (100 km) west of New Orleans. Total could not be immediately reached for comment regarding its preparations for Gustav.

A PS distributor said the complex would be shut down for at least five days if Gustav hit the site directly.

“That would put a significant dent in the market,” the source said.

Some SM trade participants said the market is viewed as oversupplied, but recent and planned turnarounds in the industry have already tightened supply some.

A contract PS buyer, citing experience from hurricanes Katrina and Rita in 2005, said any short term production disruptions would not present a problem to converters, provided they had resin already placed in the railway network.

PS buyers with a spot purchasing strategy would likely face greater difficulty in the event of a major hurricane strike in Louisiana, the source said.

“Spot buyers should be worried every year from August to November - they should be growing lots of gray hairs and aging dramatically,” he added.

PS buyers said Gustav could also affect the market by shutting down refineries or oil and gas production and driving up the cost of feedstock benzene.

Other styrenics facilities in Louisiana include Americas Styrenics' combined 950,000/tonne St. James plants and Westlake’s 220,000 Lake Charles plant.

Along the Texas Gulf coast, INEOS NOVA has 770,000 tonnes/year styrene capacity in Bayport and 530,000 tonnes/year in Texas City.

Dow Chemical operates a 60,000 tonne/year styrene plant in Freeport and LyondellBasell has styrene plants in Channelview with a combined capacity of 1.3m tonnes/year.

(Additional reporting by Brian Balboa)

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By: David Barry
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