Heavy flooding in central China province disrupts petrochemical deliveries

Author: Fanny Zhang

2021/07/22

SINGAPORE (ICIS)--Torrential rains and consequent heavy flooding in Henan in central China have disrupted petrochemical deliveries, although plant operations in the province have largely not been affected.

Major highways and railroads had to be shut across the province, which was inundated by unprecedented downpour over the past few days, posing logistics problems.

Several cities in the province recorded their heaviest rainfall in history, leaving 33 dead and eight missing, with more than 376,000 people evacuated as of 22 July, according to local government authorities.

Transporting cargoes from Henan to the southern and western regions - to Jiangxi, Hunan, Anhui and Shaanxi - was affected, according to a methanol producer, but not so much to the northeastern provinces of Shandong and Jiangsu.

Market activity has slowed down amid the disruption in deliveries from the suppliers to storage sites and down to their customers.

“I have to pause for now,” said a polyethylene (PE) trader based in Zhengzhou, the capital of Henan province.

“There’re lots of power outages and many small factories making plastic products have shut operations [because of the flooding] and no longer buy feedstocks,” he said.

Current conditions could boost demand for polypropylene (PP) in woven bags, which are typically filled with sands and piled up high to prevent flooding, a market source said.

Petrochemical plant operations were largely stable, with Sinopec Luoyang Petrochemical and Sinopec Zhongyuan Petrochemical running their refineries and downstream plants normally, sources from the companies said.

Major polyvinyl chloride (PVC), ethanol, polyolefin and methanol producers based in Henan also said their operations have not been affected so far.

Strong rains are expected to continue pounding the central part of Henan in the coming days, while other areas may see some relief.

Normal transportation of petrochemicals in and out of Henan could resume a day or two after the heavy rains stop, market sources said.

Focus article by Fanny Zhang

Additional reporting by Lucy Shuai and Sam Liang