US TPC outage to tighten BD before spare capacity kicks in

HOUSTON (ICIS)–US butadiene (BD) buyers will look to other producers to fill the supply void left by the shutdown of TPC Group’s plant in Port Neches, Texas, following the explosion there on 27 November.

Any supply tightness likely will be short term as the market adjusts to the outage, which could be months long.

This could temporarily pressure prices higher as buyers secure needed supply – even as the market remains long fundamentally and as demand has been soft all year long for both BD and downstream styrene butadiene rubber (SBR).

The US has 2.6m tonnes/year of BD capacity, but many units are underutilised amid ongoing demand weakness stemming from a slumping automotive sector.

TPC is the nation’s largest BD producer, accounting for 37% of US capacity between its two sites in Houston and Port Neches.

Port Neches alone accounts for 16.4% of total domestic capacity with two lines, according to the ICIS Supply & Demand Database, while Houston is the larger site.

TPC is unique among US producers in that it purchases its feedstock crude C4 (CC4) and has made significant investment in infrastructure to secure that supply.

Other BD producers have their own steam crackers and produce their own feedstock.

The CC4 that would go to the Port Neches site would need to be re-routed to other extraction units.

In export markets, deep-sea supply to Asia will dwindle with the outages.

More than 10,000 tonnes of US cargoes were expected to head to Asia in two separate vessels in December, but those were heard to be cancelled following the TPC blast.

On Tuesday, a response team said the fire was extinguished, nearly a week after the initial explosion. The site remains shut as four towers have been compromised or have fallen.

TPC continues to evaluate the property, and Troy Monk, director of health, safety and security at TPC Group, said he expects the company will go through several months of investigation.

It is unclear when TPC could resume operations at the complex.

The company has declared force majeure on BD from the site.

Nonetheless, Monk said, “We have received word from our upper leadership and, so far, the word is we will plan on opening the facility back up.”

BD is a key feedstock for synthetic rubbers, largely styrene butadiene rubber (SBR), which is used in tyre manufacturing. BD is extracted from crude C4s.

Major US BD producers include ExxonMobil, LyondellBasell, Shell Chemical and TPC Group.

Focus article by Amanda Hay

Additional reporting by Al Greenwood and Nel Weddle
Photo credit: JDrago Photo/Shutterstock
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