Ike tightens US C2, squeezing VCM, PE production

18 September 2008 19:21  [Source: ICIS news]

HOUSTON (ICIS news)--As the effects of Hurricane Ike creep down the supply chain, producers of polyethylene (PE) and vinyl chloride monomer (VCM) are waiting to restart due to tight feedstock ethylene (C2) supply, producers said on Thursday.

"Most folks have a chlorine supply," a large producer said.

"The issue for VCM plants is ethylene. We are going to ramp up as soon as feedstock supplies are available," the producer said.

With restarts possibly taking several weeks to complete, availability of raw material and logistics were expected to be a challenge to sites throughout the region, Dow Chemical said.

"The eastern ethylene producers are still trying to get rates up after [Hurricane] Gustav, and the western producers are trying to restart their plants after Ike," a source close to the market said.

For Dow, its PE lines in Seadrift and Freeport, Texas, were mostly undamaged by Ike, but a restart of the lines was contingent on the restoration of ethylene production and pipeline service, a source at the company said.

Dow had safely shut down its Texas sites at Freeport, Clear Lake and LaPorte, as well as the Union Carbide facilities in Texas City and Seadrift, before the hurricane made landfall, the company said.

Dow’s PE assets in St. Charles, Louisiana, were up and running, but the Plaquemine facility sustained some damage from Hurricane Gustav and was not fully back in service, a source said.

Overall, Dow was allocating PE sales at an average level of 70%, with variances for the customers’ geography and product type, the source said. Low density PE (LDPE) was the most affected product.

The allocation comes as producers continue to contend with disruptions caused by Hurricane Ike.

The storm slammed into the Texas coast early on Saturday, disrupting chemical operations along much of the region.

Many areas were under mandatory evacuation orders, which prevented employees from turning up to work. In addition, almost all of the Houston area initially lacked power.

Also, ports along the US Gulf coast have restricted access to vessels. A queue exceeding 100 vessels had formed outside of the Houston Ship Channel, according to the US Coast Guard.

Additional reporting by David Barry

For more on chlorine, ethylene, VCM or PE, visit ICIS chemical intelligence
For more on Dow's Gulf coast plants, visit ICIS plants and projects
To discuss issues facing the chemical industry go to ICIS connect

By: Leela Landress
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