Severe winter in US impacts petrochemical deliveries

17-Feb-14

Harsh winter in USA has wreaked havoc on the logistics of the petrochemical business in first few weeks of 2014. Heavy snow and freezing temperatures delayed delivery times by 7-10 days of railcars, trucks and barges during one of the roughest seasons in recent memory, as per Platts. Along with the Northeast and Midwest, the Gulf Coast has also been hit with colder-than-usual temperatures. The Gulf Coast, producing a significant portion of US petrochemicals, has been hit with ice, sleet and freezing temperatures in January and February. Earlier this month, Equistar Chemicals declared a force majeure event for all North American polyethylene grades, citing logistical delays due to severe weather, according to a letter obtained by Platts. Equistar, an arm of LyondellBasell, told customers it was evaluating the impact on transportation facilities and carriers, and warned customers they could experience delays in receiving shipments. Their customers are not alone. Industry sources who buy and sell products throughout the petrochemical chain have said the wintry conditions have posed a challenge. Some PVC suppliers were heard working to time truck deliveries around winter storms. Diethylene glycol spot prices have moved higher in North America, according to sources, in part because railcar traffic from Canada has been slowed, and also because of heavier demand for glycols from antifreeze makers. And suppliers who rely on barges to get chemicals to customers have often found themselves having to contend with frozen stretches of river. Multiple chemical producers in the Midwest have also been heard implementing sales allocations, due largely to weather-related production issues. A US polypropylene trader noted that the winter weather is also impacting Americans' buying appetite for goods made from chemical-based materials, and as a result upstream domestic demand could be impacted. The National Weather Service has predicted snow, showers and freezing temperatures for much of the eastern US in the coming days.