FocusLyondellBasell's high percentage of US force majeures

13 June 2014 19:42  [Source: ICIS news]

LyondellBasellFocus story by Lane Kelley

HOUSTON (ICIS)--Is LyondellBasell jinxed?

Another force majeure issued by the company this week makes it an obvious question, since LyondellBasell already had the highest percentage of such declarations filed in the US this year, according to ICIS analysis. 

American chemical producers have issued force majeures this year covering at least 23 plants, according to a survey by ICIS, with LyondellBasell accounting for more than half of the plants (14).

Nine of the producer's US plants make polyethylene (PE), two polypropylene (PP), and one each for vinyl acetate monomer (VAM) and butadiene (BD).

LyondellBasell issued its latest force majeure, on acetic acid made at its La Porte, Texas plant, on Tuesday, because of utilities and feedstock supply disruptions.

That one carried a double-punch, though, because it extended the VAM declaration issued by the producer in March that was expected to be lifted in May. Acetic acid is a major VAM feedstock.

LyondellBasell said via email on Friday that it does not comment on such operational matters.

But the company's broad explanation for its plight, related by CEO Jim Gallogly in an April conference call, is that the first quarter brought $300m worth of problems that had to be solved: plant maintenance, weather-related raw material costs and shipping delays.

"The first quarter was not on our normal pace," Gallogly said.

Contracts cover abnormal occurrences through force majeure clauses. The term is French for "greater force" and covers unforeseen events - acts of God, as it were - such as the lightning strike that knocked out power at a LyondellBasell plant in France last July. But the term's meaning has been broadened to the point that a supply disruption or a compressor breakdown is now as majeure as a bolt of lightning.

"Pretty convenient, isn't it?" observed a US methanol source on the current use of the term.

The website of the American Association of Legal Counsel calls force majeure clauses "a textual dump for every 'what if' that could ever possibly impact performance". The organisation recommends avoiding the term because most uses stray too far from the original notion of a truly unavoidable event.

However, chemical producers buy insurance that covers force majeure events, so their financial considerations tend to take precedence over traditional word usage.

Numerous force majeures declared this year have cited equipment or mechanical failures.

Some have cited weather-related issues, which could qualify as unavoidable events, although weather issues for a plant in Texas this past winter were probably not as majeure as those faced by plants in the upper Midwest or Northeast.


 Producer

Chemical

Plant location

Date

Solvay

Hydroquinone

Baton Rouge, La

Jan 2014

Ineos

Polyethylene

La Porte, Tx

Jan 2014

LyondellBasell

HDPE

Chocolate Bayou, Tx

Feb 2014

LyondellBasell

HDPE

Clinton, Iowa

Feb 2014

LyondellBasell

HDPE

Matagorda, Tx

Feb 2014

LyondellBasell

HDPE

Victoria, Tx

Feb 2014

LyondellBasell

LLDPE

La Porte, Tx

Feb 2014

LyondellBasell

LLDPE

Morris, Ill

Feb 2014

LyondellBasell

LDPE

Clinton, Ia

Feb 2014

LyondellBasell

LDPE

La Porte, Tx

Feb 2014

LyondellBasell

LDPE

Morris, Ill

Feb 2014

Flint Hills

Trimellitic anhydride

Joliet, Ill

Feb 2014

Flint Hills

Purified Isophthalic acid

Joliet, Ill

Feb 2014

Flint Hills

Maleic Anhydride

Joliet, Ill

Feb 2014

LyondellBasell

VAM

La Porte, Tx

March 2014

DuPont/Kuraray

VAM

La Porte, Tx

March 2014

LyondellBasell

Butadiene

Channelview, Tx

March 2014

LyondellBasell

Polypropylene

Lake Charles, La

March 2014

Ineos

Ethylene

Chocolate Bayou, Tx

March 2014

TPC

Butadiene

Houston, Tx

April 2014

LyondellBasell

Polypropylene

Bayport, Tx

April 2014

Shell

Phenol

Deer Park, Tx

May 2014

LyondellBasell

Acetic acid

La Porte, Tx

June 2014


Click here to watch the latest ICIS Special Report, in which European pricing editors discuss the key issues affecting their markets as we approach the middle of 2014.


By: Lane Kelley
+1 713 525 2653



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