OxyChem declares force majeure on chlor-alkali, EDC post-Ida

OxyChem, the chemical division of Occidental Petroleum, has declared force majeure on chlorine, caustic soda, ethylene dichloride and other products in the aftermath of Hurricane Ida's assault on Louisiana, according to a customer letter seen Sept. 1 by S&P Global Platts.

"Due to the nature of the event, OxyChem is currently unable to provide an estimate of the duration of the force majeure event or the extent of its impact on our operations," said the letter, dated Aug. 31.

The letter said further that the cessation of the force majeure would depend on OxyChem's ability to resume safe operations at its facilities and other factors, including employee and contractor availability, power restoration, resumption of logistics services and ability to secure raw materials.

Resumption of production also depends on "assessment, repair and replacement of damaged plant equipment," the letter said.

The company declined comment on operations.

OxyChem operates four plants along the Mississippi River's petrochemical-laden corridor between Baton Rouge and New Orleans. Of those, two are chlor-alkali units in Taft and Convent with a combined capacity of 1.03 million mt/year of chlorine and 1.13 million mt/year of caustic soda. The company also operates two ethylene dichloride plants in Geismar and Convent with a combined capacity of 928,000 mt/year.

Chlorine is the first link in the production chain for construction staple polyvinyl chloride, which is used to make pipes, window frames, vinyl siding and other products. Caustic soda, a byproduct of chlorine production, is a key feedstock for alumina and pulp and paper industries.

EDC is an intermediate in the PVC production chain and made from reacting chlorine with ethylene.

OxyChem's force majeure declaration applies to other products as well, including potassium hydroxide, sulfuric acid, methyl chloride, chloroform, carbon tetrachloride and perchloroethylene.

Second force majeure declared

The company also declared force majeure on products manufactured at separate plants in Luling, Louisiana, which was shut down for Ida, and Sauget, Illinois, which depends on feedstocks from the Luling plant, according to a customer letter seen by Platts.

That letter, dated Aug. 30, also cited Ida's damage. Affected products include water treatment chemicals for industrial and swimming pool use. The Sauget plant uses cyanuric acid produced at Luling, so the Luling shutdown affects both, the letter said.

Westlake Chemical, which shut entire PVC complexes in Geismar and Plaquemine ahead of Ida's landfall, said in a statement Aug. 31 that initial assessments revealed limited physical damage to its facilities, and restarts depend on availability of electricity, industrial gases and other utilities and feedstocks.

Westlake on Aug. 31 announced price increases on domestic caustic soda, according to a customer letter seen by Platts. The company said its prices for membrane-grade caustic, which is the purer of two grades, would rise by $75/st, while diaphragm-grade prices would rise by $55/st. The increases were to be effective immediately or as contracts permit, which is typical of such announcements.

Shintech and Formosa Plastics USA also shut facilities along the river ahead of the storm. Shintech operates a PVC complex in Plaquemine and a 900,000 mt/year PVC unit in Addis, while Formosa operates a 513,000 mt/year PVC unit and an upstream 653,000 mt/year VCM plant in Baton Rouge.

Both had regained access to power, but remained shut Sept. 1 awaiting access to industrial gases, according to sources familiar with company operations.

Neither Shintech nor Formosa responded to requests for comment.

Supply of products throughout the PVC chain have been tight since two hurricanes hit Lake Charles in 2020, exacerbated by a deep freeze that hit the US Gulf Coast and much of the US in mid-February. Market sources had said supply could recover by Q4 2021 if a major storm did not hit the region. In Ida's aftermath, sources said supply of chlorine and caustic soda as well as PVC was expected to tighten further, sending prices higher.

"This couldn't have come at a worse time," a source said. "It was a powerful storm. Even if plants are down just 10 days to two weeks, that's a lot of lost production for products that were already extremely short."