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Freezing Temperatures and Production Issues in the US Gulf triggers a Force Majeure and Lifts PGP Monomer, PP, and PE Resin Prices
January 19, 2023

An Arctic Blast brought frigid temperatures down to the Petrochemical producing gulf coast, leading to precautionary shutdowns, one Force Majeure declaration, and some other seemingly minor disruptions at a number of facilities this week. The resulting hard freeze created widespread flaring and reduced monomer / resin production, but so far most issues appear to be manageable, though there is still risk as producers look to bring units back to normal operations.

One major disruption has been reported from Ineos O&P at their massive Chocolate Bayou complex in Alvin, TX, which producers Ethylene, Propylene and has annual Polypropylene capacity of around 1 Billion pounds. On Jan 18, 2023 Ineos declared Force Majeure on Polypropylene from this facility citing limited operations as a result of multiple instances of equipment failure and mechanical breakdowns.

Polymer Grade Propylene prices have continued to climb, as it had already been snugly supplied for several months due to previous Refinery and PDH disruptions. A relatively large volume of PGP monomer changed hands this week with prompt Jan PGP trading up to $.52/lb by Thursday, $.025/lb higher than this past Friday before the weather incident. This is the highest price level for PGP since March, 2023. These issues did not bring a meaningful impact to the spot Ethylene market, which maintained stable pricing of $.19 - .195/lb.

Meanwhile, resin pricing also ticked higher this week, building on recent spot market momentum ever since seasonal December Deals dried up prior to year-end. Polyethylene spot levels added a half-penny, while Polypropylene rose a solid cent and are now up $.03/lb since the month began.

Below is a list of Olefin producers that have been affected by the extreme winter weather this week, based on local and state filings in Texas, and various market updates.

Formosa: Point Comfort, Texas

INEOS: Chocolate Bayou, Texas

Enterprise Products: Mont Belvieu, Texas -- PDH #2

LyondellBasell: La Porte, Texas

Chevron Phillips Chemical: Cedar Bayou, Texas

NOVA: Geismar, Louisiana

Bayport Polymers: Port Arthur, Texas

Motiva: Port Arthur, Texas

ExxonMobil: Beaumont, Texas

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