Canadian Plastics

U.S. winter storm impacting the polyester value chain, analyst says

The storm currently raging in Texas could have an impact on the global polyester chain, according to market analyst Wood Mackenzie.

February 18, 2021   Canadian Plastics

Photo Credit: Stock.adobe

As the U.S. deals with this week’s winter storm, refining and petrochemicals outages could have an impact on the global polyester chain, according to market analyst Wood Mackenzie.

Power and water outages have affected much of Texas since Feb. 15, and although they’re gradually being restored, access to feedstock remains an issue as wellhead production freezes off.

“The most affected products are paraxylene and monoethylene glycol,” said Salmon Lee, Wood Mackenzie head of polyesters. “In the affected states, capacities of these two important building blocks for polyester production total 3.4 Mt and 4.99 Mt respectively. PTA plants in the U.S. are located outside the disaster zone and are still running. However, this may change if paraxylene supply dries up amid the outages.”

For now, Lee said, U.S. polyester production is reported to be business-as-usual, but uncertainty prevails in the raw material sector if either paraxylene/PTA and/or monoethylene glycol (MEG) supply runs dry – the status of polyester plants could change very quickly.

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“Spot prices of paraxylene, PTA, and MEG are already rising sharply in response to the escalation in crude prices, as well as concerns of an acute supply shortage for polyester feedstocks,” Lee said. “The impact on PET and polyester fibre pricing will likely be significant.”

Genscape, Wood Mackenzie’s sister company, estimates that, as of Feb. 17, 45 per cent of total U.S. paraxylene capacity was offline.

“If paraxylene dries up, PTA production will be adversely impacted, and the U.S. will need to import much more to keep polyester operations going,” Lee said. “However, paraxylene imports into the U.S. were already expected to be lower from Europe given the supply tightness there, as well as from the Middle East due to ongoing maintenance in Saudi Arabia.,”

U.S. MEG capacity accounts for 10 per cent of global capacity, and the current weather situation will have ramifications beyond the U.S., Lee said. “If U.S. MEG production is cut, U.S. exports of MEG will likely fall dramatically…[and] the U.S. may be forced to seek out import to make up for this loss.”

If U.S. MEG plants in the Texas region remain down for an extended period, polyester production, PET resin and fibres could be adversely affected by the shortages, Lee continued, and downstream operations are looking at potential curtailment in various areas due to the winter storm or a lack of natural gas. “Disruptions in raw material availability will have a significant impact on production and subsequently on PET resin availability as the North American PET resin market was already tight,” Lee said.


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