PetroChem Wire. Post-Harvey resin update

Transcription

1 PetroChem Wire Post-Harvey resin update PetroChem Wire Samantha Hartke, Product Manager September 2017

2 Agenda PetroChem Wire: Who we are Harvey: Olefins production losses Harvey: Polyolefins production losses Resin availability: PE, PP and price outlooks

3 PetroChem Wire: Who we are Daily, independent publisher creating global awareness of the US NGLs, olefins, polymers, aromatics and refined products markets by providing useful and clear information at the close of each business day Formed in 2007 US olefins, polyolefins prices serve as benchmarks for physical and swap contracts on CME/NYMEX US benzene prices serve as benchmarks for ICE contract Spot prices cover the entire value chain: NGLs/ Naphtha Olefins/ Aromatics Plastics Crude Aromatics Refined products

4 Olefins in the path of Harvey North America current ethylene capacity TX LA IA IL KY Ontario Alberta Texas is home to the bulk of North American petchems capacity: ~62% of ethylene production capacity and ~69% for propylene Of that, 30.9 billion lbs/yr of ethylene capacity was in Harvey s path (41% of total NAmer) as was 59.4 billion lbs/yr or propylene capacity (87%) US existing propylene capacity 68.8% 0.3% 1.1% 0.5% 23.8% 0.3% 0.6% 0.7% 0.2% 1.2% 0.7% 0.9% 0.3% 0.6% CA IL IA IN KY LA MA MI NJ OH OK TN TX WV

5 Polymers in the path of Harvey Existing PE capacity 25 Billion lbs/yr Texas is also home to the bulk of North American polymers capacity: ~57% of PE capacity and ~68% for PP 0 Canada Mexico Iowa Illinois Louisiana Texas Of that, 30.6 billion lbs/yr of PE capacity was in Harvey s path (66% of total NAmer+MX) as was 59.4 billion lbs/yr of PP capacity (77%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Existing US polypropylene capacity TX WV LA NJ MI CA IL

6 Almost 3/4 of PE capacity shuttered by Harvey was restarted or in the process of restarting two weeks after landfall. Almost all PP units restarted two weeks after Harvey s landfall. Harvey makes landfall... twice Billion lbs/yr Production losses Ethylene PGP RGP CGP PE PP PVC/VCM 1-3 day forecast 4-5 day forecast Harvey Landfall #1 Harvey Landfall #2 Production currently offline/reduced

7 How we got here: Production

8 Price effects: Monomers Landfall #1 PCW spot monomers pricing Landfall #2 $/pound Aug 22-Aug 23-Aug 24-Aug 25-Aug 26-Aug 27-Aug 28-Aug 29-Aug 30-Aug 31-Aug 1-Sep 2-Sep 3-Sep 4-Sep 5-Sep 6-Sep 7-Sep 8-Sep 9-Sep 10-Sep 11-Sep 12-Sep 13-Sep 14-Sep 15-Sep Ethylene Mt.B-NOVA PGP Mt. B EPC RGP Ethylene prices dipped right after Landfall #1, but have since increased cpp (25%), PGP prices were stable through Landfall #2 but have risen 4 cpp (~9.8%)

9 Price effects: Polymers cents/pound Landfall #1 PetroChem Wire spot prices Landfall #2 HDPE Blow Mold - FOB Houston LLDPE Film Butene - FOB Houston HoPP Injection FOB Houston Polymers price were stable at first, but spiked after the second landfall. PE is now up 5.75 cpp (12%) PP is now up 9 cpp (18.75%)

10 Resin availability status Olefins plants are now producing on-spec product and are in the pipe (CC plants in particular) Some of the larger units around Houston sustained greater damage (flooding) and could take at least a month to repair. Ports are back open (w/ slight restrictions); loadings are going as fast as possible Several polymers plants have begun restart activities. Very few had major damage. Supply availability taking priority over cost. Most acute supply challenges seen in HDPE BM, HDPE IM and LLDPE hexene. Large blow molders and distributors scouring the market for spare inventory to cover shortfalls due to supplier force majeures. Export volumes are very limited; priority given to domestic customers.

11 Resin availability status: PE PE production continues to ramp up. These suppliers declared force majeure on PE: Formosa, LyondellBasell, Ineos, and Chevron Phillips. Dow and ExxonMobil communicating supply cuts to individual customers. Total lifted FM last week Normal ops resumed at : Total Bayport, Formosa Point Comfort (still has issues with product transportation), ExxonMobil Mont Belvieu, CP Chem Orange and Pasadena, Ineos (near Houston) and Dow (all TX). Restart ongoing at: XOM Beaumont, LyondellBasell s four PE plants Dow Seadrift to restart sometime this week. CP Chem Cedar Bayou facility suffered significant flood damage concerns about LT impact of co-monomer shortages. In the PE contract market, suppliers have announced 4 cpp price increases; timing ranges from Sep 1-Oct 1. Aug contracts were up 3 cpp. One supplier announced an additional 4 cpp increase, effective Oct 15; another announced a 3 cpp mid-oct increase last Friday.

12 Resin availability status: PP Most PP capacity affected by Harvey has restarted, but unclear if restarted units were at full rates. Lack of capacity expansions in foreseeable future proving to be an issue. Feedstock issues: Force majeure on PGP from Enterprise and CPChem Total maintains its force majeure on PP. Only one of its La Porte PP units is running reduced (HoPP grades). PP supplies have been put on allocation by Formosa, LyondellBasell and ExxonMobil (70%). Units at/near normal rates: Formosa Point Comfort, XOM Baytown, Braskem La Porte and Freeport. Units still in restart mode: LYB Bayport and Lake Charles. More suppliers are expected to implement a 3 cpp price increase (on top of any change in monomer). Not all suppliers have announced a 3 cpp increase. Market expects monomer contract prices to increase significantly in Sep and Oct (propylene derivative capacity is restarting more quickly than propylene capacity).

13 Resin availability status: Rail & truck Rail service has been restored, but delays abound due to ongoing repair work and lower train speed limits. BNSF: All its tracks in Texas have been reopened. KCSR: Force majeure and an embargo on network in Texas lifted last Friday. Delays on all routes to be expected once operations resume amid ongoing repair work. Union Pacific: Operates many of the rail lines in southeast Texas. 2,440 miles of track were affected by Harvey. That number had been reduced to 50 miles as of last week. Freight demand on the rise as trucks diverted from deliveries to emergency relief services. Truck rates up 10 cents (national average)-$1.50 (TX)/mile, depending on the route.

14 Thank you! Samantha Hartke Product Manager, PetroChem Wire Ph: (832) Critical market information for the entire petrochemical chain