Mexico’s Altamira petchems force majeure declarations continue on severe drought

Jonathan Lopez

06-Jun-2024

SAO PAULO (ICIS)–Petrochemicals producers in the production hub of Altamira, in the Mexican state of Tamaulipas, keep declaring force majeure as a severe drought halved water supplies to industrial players.

On Thursday, a spokesperson for Cabot said to ICIS the company has also declared force majeure for carbon black from its Altamira facilities, which adds to several force majeure declarations in the past two weeks.

The drought affecting Tamaulipas has its epicenter in the south of the state, where Altamira is located, and recent minimal rainfall has not helped much to fill up the state’s water reservoirs.

The drought, which the state government says has lasted already eight years, has reached a critical point in 2024, prompting authorities to arrange water deliveries in tanker trucks from other state municipalities as well as other Mexican states.

The crisis could end up hitting US petrochemicals, as the state is a key supplier to that market. Earlier this week, M&G Polimeros declared force majeure on one of its two polyethylene terephthalate (PET) lines from Altamira.

The line has a production capacity of 420,000 tonnes/year, which has prompted fears the US’ PET supply could be hit.

PETROCHEMICALS HIT HARD
Cabot’s force majeure from Altamira on carbon black – a material used as a colorant and reinforcing filler in tires and other rubber products, as well as a pigment and wear protection additive in plastics and paints – follows a string of declarations from other producers.

“Over the past weeks, the water supply to our Altamira plant has deteriorated in both quantity and quality. Consequently, our plant is currently unable to operate all production units and is running limited production, along with warehouse, packing, and shipping operations,” Cabot’s spokesperson said.

“Due to this situation beyond our control, Cabot has declared a force majeure for carbon black from this facility.”

Apart from M&G Polimeros’ force majeure on PET, several other producers in Altamira have also issued force majeure declarations or have sharply reduced operating rates.

Mexico’s chemicals producer Orbia/Vestolit, a large polyvinyl chloride (PVC) player, was one of the first companies to declare a force majeures out of its facilities in Altamira in mid-May.

This week, a spokesperson for the company said to ICIS the force majeure remained in place, with no expected date for return to operations as the water situation has not improved, rather the opposite.

Saudi petrochemicals major SABIC declared force majeure on acrylonitrile butadiene styrene (ABS).

European major INEOS Styrolution also declared force majeure on ABS from Altamira, as well as on general purpose polystyrene (GPPS).

US chemicals producer Chemours also said it has halted titanium dioxide (TiO2) operations in Altamira.

Germany’s major BASF, also with facilities in Altamira, had not responded to a request for comment at the time of writing.

Trade group the Association of Industrial Companies of Southern Tamaulipas (AISTAC), which represents many of the producers listed above, had not responded to a request for comment at the time of writing.

WATER TANKERS, DRY LAGOONS
The governor of Tamaulipas, Americo Villarreal, ordered this week to send tanker trucks to the south of the state from other municipalities not affected as harshly by the drought, as well as from other Mexican states.

The trucks will not sort out the dire situation at industrial parks, however, as the water will be deployed to households, which are also suffering water restrictions.

“With the arrival of these units, support to the southern area of ​​Tamaulipas is reinforced, adding to those that the Secretariat [agency for hydraulic resources] had previously sent, as well as those that have arrived from other entities, with 50 units distributing water,” said the state’s government.

“[This] coupled with the installation of 25 isotanks with a capacity of 24,000 liters in strategic points, sent previously by the agency.”

As if it was not enough for tamaulipecos to suffer water restrictions in their own homes, natural spaces they hold dear are also showing the scars of more severe droughts as climate change advances unabated.

This week, local media reported how Champayan lagoon, a large water natural reservoir west of Altamira, dried up practically from one day to the other.

Front page picture: Tanker trucks heading to the Altamira area for emergency water supplies for households
Source: Government of Tamaulipas

Clarification: Re-casts paragraph 15

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