28 August 2012 16:30 [Source: ICIS news]
HOUSTON (ICIS)--Tropical Storm Isaac poses its biggest threat to US refinery production rather than to chemicals production, an analyst said on Tuesday.
Isaac is expected to strengthen into a hurricane and make landfall by Wednesday on the Louisiana coast, said Laurence Alexander, an analyst with Jefferies.
That part of the US has as much as 19% of the nation's refinery capacity, he said.
Any outages could squeeze margins if they affect more than 20% of the capacity of a particular chemical, Alexander said.
Although it is unlikely, the disruptions could become severe enough to destroy demand by causing a spike in costs for energy and feedstock, he said.
However, producers can easily manage brief interruptions by relying on inventories, Alexander said. In fact, producers could easily handle disruptions that last as long as two weeks – as long as less than 10% of the output of a particular chemical is affected.
Companies have already shut down several petrochemical plants and refineries as a precaution.
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