Now that Hurricane Harvey has subsided, let’s turn our attention to the longer-term impact of the disaster on the US economy and chemicals supply and demand.

In the immediate aftermath of the event, ICIS estimated that about 37% (11.1m tonnes/year) of US ethylene capacity was off line, and 26% (4.2m tonnes/year) of polyethylene (PE) capacity. Figures for other commodities off line included 23% (5m tonnes/year) for propylene, 25% (2m tonnes/year) for polypropylene (PP) and 31% (2.8m tonnes/year) for benzene.

On 5 September there were reports of some refineries preparing for restart, but no chemical plants. Valero’s 395,000bbl/day Port Arthur refinery is being assessed for restart while its refineries at Houston, Three Rivers, Texas City and Corpus Christi were ramping up production by 4 September. On 4 September, ExxonMobil said it would begin to restart its Baytown refinery and chemical site plus part of its Beaumont site.

We can expect to see gradual ramping up of chemical capacities over the next few weeks but a return to normal levels of production could be weeks or even months away. One south China-based trader told ICIS: “We had received the news from American producers – they were set to talk with their customers about the cancellation of products. And there seemed no hope of business coming back to normal in the rest of this year.”

Some chemical prices are rising, especially in the US and Asia in expectation of tightening of supply caused by Harvey. But there has not been much discussion about the impact on demand so far.

Economists and analysts are debating the long-term impact. Although there should be some stimulating effect on demand from the reconstruction of damaged property and infrastructure, the fact that the country’s fourth-largest city ground to a halt for several days will cost the nation in terms of lost GDP.

The total bill could exceed the cost of Hurricane Katrina, according to Texas governor Greg Abbott. He told Fox News: “Katrina caused, if I recall, more than $120bn [in damage] but when you look at the number of homes and business affected by this, I think this will cost well over $120bn, probably $150bn to $180bn.”

Meanwhile the American Chemistry Council estimates that the direct effects on the economy should be modest in Q3 and will turn positive in Q4 on rebuilding efforts. “The effects will likely be less than 0.5 percentage points. The effects on the Houston economy, however, are extensive.”

RELX Group, the parent group of ICIS, has matched staff donations to the American Red Cross for Harvey relief efforts, as well as to the British Red Cross for South Asia flood relief.

Look out for a detailed examination of the long-term impact of Harvey by International eChem's Paul Hodges in the 22 September issue of ICIS Chemical Business

Interactive map by Bobbie Clark. To see the latest status of plants in the Houston area click on the drop down menus to select a product or company