International trends

 The US hurricane season brings significant uncertainty to chemical supply chains, and currently, industry attention is focused on Hurricane Beryl as she moves through the Caribbean. There's concern that Beryl could become the costliest hurricane ever to hit North America, potentially surpassing Hurricane Katrina's destruction in 2005. Hurricane Ida in 2021 is another painful reminder of the impact of severe weather, having closed many petrochemical plants and refineries for extended periods.   

As Hurricane Beryl advances, questions revolve around her potential path and impact. The US hurricane season, still in its early stages, means there could be many more storms to monitor before the season ends in November.   

According to William Bann, Lead Business Manager at ResourceWise, the US Gulf Coast petrochemical industry is well-prepared for hurricanes, with established protocols in place. However, the most significant issues typically arise from power outages and severe storm surges. Currently, companies are maintaining average to lower-than-average inventories due to weak demand.   

Restoring operations after a storm can be challenging, particularly when utility poles are down, as seen with Hurricane Ida in 2021, which impacted chlor-alkali markets due to power shortages. Similar disruptions can affect gasoline and diesel prices.   

Transportation links, such as the Mississippi River, are also vulnerable. After Hurricane Ida, the river's flow was temporarily reversed, halting barge traffic and impacting supply chains for goods like grains and oleochemicals.   

Extreme weather in 2024, including potential outcomes for Hurricane Beryl, is being closely monitored. Forecasts from CBS News and News6 suggest possible scenarios for Beryl's path, either moving towards Texas or causing inland flooding in Mexico. Regardless of Beryl's impact, the National Oceanic and Atmospheric Administration (NOAA) predicts up to 25 named storms this season, with up to 13 potentially becoming hurricanes, including up to seven major hurricanes.     

Residents and industries along the Gulf Coast will continue to watch the weather closely, as the season progresses.   

If Louisiana-based chlor-alkali producers shut down their plants this year as they did in 2021, it will lead to a tightened supply of caustic soda and vinyls from the US. During 2021, North American caustic soda prices fluctuated by several hundred dollars per ton, with the most significant changes occurring in the weeks following Hurricane Ida. These price increases were primarily due to a scarcity of supply in the market. When materials are scarce, prices rise—a well-established pattern. 

  Availability was already limited due to the Texas deep freeze in February 2021, from which producers were still recovering. The demand for caustic soda rebounded faster than anticipated, leading to very tight inventories and higher selling prices due to the low output.   

A similar trend was observed in North America's maleic anhydride (MA) markets. Huntsman’s 45 ktpa MA plant in Geismar, Louisiana, shut down because of a power outage in the area. MA prices in the US increased as a result.   

Kaiyin Hu, Senior Consultant at ResourceWise, Chemicals, explains that the US import share for maleic anhydride (MA) is consistently low. "Customers mainly rely on domestic supply," he notes. Therefore, when adverse weather conditions affect plants that produce this key intermediate, the prices set by producers increase, forcing the domestic market to either pay the higher prices or go without.