US Formosa issues force majeure on Point Comfort chlor-alkali

18 April 2017 23:56 Source:ICIS News

US Formosa issues force majeure on Point Comfort chlor-alkaliHOUSTON (ICIS)--Formosa Plastics USA declared force majeure on Tuesday at its chlor-alkali plant in Point Comfort, Texas, after a “torrential thunderstorm” rendered the plant inoperable, according to a company letter to customers.

The plant has a capacity of 910,000 tonnes/year for chlorine and 1m tonnes/year of caustic soda.

The outage is expected to further constrain a US liquid caustic soda market that is already deemed tight with little spot material available. 

Heavy rains had pounded the area of the plant on Tuesday morning, prompting the National Weather Service to issue a flood warning.

Formosa did not say when it expects to restart the facility but would provide further updates when they become available.

The outage comes as the US liquid caustic market is hampered by tight supply, and domestic prices have been moving steadily higher.

Because of a heavy maintenance schedule for March, April and May, US producers had separately nominated domestic contract price increases of $60-85/dst (dry short ton), sharper increases than the US market is accustomed. Most contract business is heard to be taking significant portions of the proposed increases.

Last week, Westlake Chemical said it would not be able to provide spot material during April from its distribution terminals on the Mississippi and Ohio river systems.

Westlake, which has endured a longer-than-expected maintenance at its Calvert City complex in Kentucky, was heard to have bought several barges of caustic soda from another producer, indicating that the market may be tight but not short.

Market players said that disruption will limit supply in markets around Pittsburg, Pennsylvania; Cincinnati, Ohio; St. Louis, Missouri; and Chicago, Illinois.

Formosa’s force majeure at Point Comfort will likely be more widely felt throughout the US market.

Spot barge prices have risen about $50/dst since the beginning of the year, and contracted accounts are heard to be accepting price increases of $40/dst and higher for April business.

Image: Polyvinyl chloride (PVC) is a major end-use for chlorine. Photo by BROKER/REX/Shuttershock.

By Bill Bowen