Hurricane Ida Another Setback for Supply Chains, But…

September 16, 2021

…On a positive note, Ida was less devastating than the winter storms Uri & Viola last February.

(When supply chains have as many problems as they’ve had this year, yeah, we’re looking for the bright side!!)

It’s been a rough year for supply chains. Most recently, Hurricane Ida, a dangerous and major hurricane, made landfall in Louisiana on August 29. Ida caused widespread power outages, flooding and damage, including to many chemical production facilities. Not surprisingly, this has exacerbated the issues chemical supply chains were already facing. In addition to these primary issues, chemical plants have also been dealing with issues such as problems getting a consistent and reliable supply of feedstock materials since the storm. Although many plants experienced outages lasting weeks, the overall effect of the storm was less devastating than that of the winter storms Uri & Viola earlier this year.

Here we take a look at the effect Hurricane Ida had on some of the chemicals that were affected by the storm:

Chlor-Alkali (Sodium Hydroxide/Sodium Hypochlorite): Ida had significant impact to the chlor-alkali market, and numerous producers have declared Force Majeure following the storm. These producers had plants in the direct path of the storm, and shut down prior to the storm. Now the idled plants are waiting for raw materials and repairs. This has caused noticeable tightness in the Sodium Hydroxide market.

Isopropyl Alcohol (IPA): While we have seen some softening in the Isopropyl Alcohol market in recent months, Ida shut down 35% of capacity and appears to have halted the sliding trend.

Glycol Ethers: Glycol Ethers have been affected, as 23% of capacity went offline.

Potassium Hydroxide: The largest liquid Potassium Hydroxide plant in the world is in Louisiana and still not running due to power outage. After shutting down two days prior to Ida, it is expected to be online again soon.

Ethylene Glycol: Approximately 10% of capacity is offline due to Ida. Additionally, Ida affected nearly 60% of capacity for feedstock Ethylene Oxide. Ethylene Glycol supply has been short for most of 2021. While there has been considerable effort to rebuild inventories this year, this now likely won’t be possible before 2022.

In addition to plant closures, Ida has impacted logistics on other key commodities as well as many downstream chemical markets such as paints and coatings, plastics, and etc.

For more information about Hurricane Ida’s affect on your chemical supply, speak to a representative.

Acetic Acid Remains Tight After Deadly Chemical Leak

August 31, 2021

Acetic Acid and derivatives have been dogged by persistent short supply since the unexpected freeze up along the Gulf Coast last February. Force Majeures have dragged on for months, and some domestic producers are still on Force Majeure.

It was hoped that the challenges would begin to ease by the third quarter of 2021. Unfortunately, there have been further production issues in the meantime. One problem producers have faced is an inability to obtain sufficient feedstock supply. Then, on July 27, an Acetic Acid leak at LyondellBasell tragically resulted in the death of two people, as well as burns and injuries to several more. The plant was already down for planned maintenance, and the investigation of the incident prolonged the outage. This incident dashes hopes for any easing of supply constraints for Acetic Acid in the short term. Market prognosticators now expect Acetic to remain tight throughout most or all of 2021.

The shortness of supply is also affecting international trade. Under normal circumstances, United States exports much more Acetic Acid than it imports, largely to Mexico, Europe and Brazil. Exports were just beginning to ramp up following the winter outage when the leak occurred. Now, as producers continue to be unable to keep up with domestic or export markets, these countries are turning to Asia to make up the lack.

The current situation with the Acetic Acid market is affecting downstream products, i.e. acetates, as well. The largest end use for Acetic Acid is Vinyl Acetate Monomer (VAM), which consumes 35% of all Acetic Acid produced globally. VAM is used to produce paints, coatings, adhesives, films, and etc. Other downstream products of Acetic Acid include: purified terephthalic acid (PTA), ethyl acetate, acetic anhydride, monochloroacetic acid and butyl acetates.

For questions about the current situation in the Acetic Acid market, and how this may affect you, speak to a sales representative.

U.S. Thirsty for Citric Acid Imports

August 18, 2021

It’s peak demand season for Citric Acid, and the U.S. is short on supply.

There are only four Citric Acid producers in North America, which have the ability to supply 60 – 65% of our total need. The remaining 35-40% is, under normal circumstances, primarily met with imported product from Thailand.

Due to several factors, imported product has become increasingly difficult to get. One of the largest Thailand producers of Citric Acid that has declared Force Majeure on Citric Acid is citing the following reasons:

  1. The major shipping problems and astronomical container rates and fees currently affecting all overseas shipping, see our blog.
  2. Lack of feedstock materials (also due to the pandemic).
  3. Weaker exchange rates due to the unprecedented stimulus funding in the U.S.

Lack of imported product is the main reason for the shortness of supply. However, two U.S. producers are also having operational issues that are keeping them from supplying at full capacity, albeit temporarily. U.S. producers are also experiencing higher cost of raw materials and transportation.

At present, domestic producers are sold out weeks and months into the future, unable to fill the gap in the market and supply the shortfall. Prices are jumping up on a regular basis. How long will this last? One of the largest domestic producers has stated they do not foresee supply catching up with demand until 2023.

For your Citric Acid needs, reach out to a representative for current pricing and availability, or request a quote.

Prices Rise as Supply Chains Continue to Struggle

July 20, 2021

Around the world, supply chains are in turmoil. As a result of many factors, lead times for goods have continued to increase during the year, and prices have continued to rise. While we don’t know yet how long this will last, we do know that we likely have not yet seen the upper limits of the upward trend in pricing.

As in all other sectors of the market, CORECHEM has had to work to overcome the difficulties posed by reduced availability and increased prices of drums, totes, and other packaging materials. This has led to broad price increases on most products.

Supply Chain

Why Are Supply Chains Struggling?

The U.S. economy may have shut down last year, but consumers did not. Lockdowns led to people sitting at home buying goods online, requesting home delivery. This increased demand for goods and packaging at a time when they were in shorter supply. Spring led to the vaccine rollout, and as consumers began to get back to their normal lives, this led to further increased demand for goods. Unfortunately, the workers that produce & transport them are still behind, as they were never given a chance to catch up.

Meanwhile, the additional volume of goods trying to come into the country on container ships has overwhelmed our ports and port workers. The price of containers has climbed to astronomical heights. The containers themselves have been in very short supply, as empties are getting stuck sitting in inland depots or stacking up at cargo ports as they simply aren’t getting picked up (due to countries in various stages of lockdowns), and container manufacturers aren’t able to produce more containers fast enough. Outbreaks of the COVID virus among port workers and other essential employees has also slowed processing of container ships.

Several other factors have played a part in the issues supply chains are currently facing. Notably, the blockage of the Suez Canal for six days caused significant delays to many container ships. Some freak weather events along the Gulf Coast earlier this year also caused havoc to production of goods and shipping routes. Also, the ongoing shortage of truck drivers in the U.S. continues to be a constraint. The pandemic only made the driver shortage worse, as it became hard to train more drivers.

CORECHEM continues to work to ensure continuity of supply of goods, and is multi-sourced on many products to ensure ongoing supply. With questions about recent price increases and product availability, speak to a representative.

Sodium Hydroxide Weathers Another Storm

July 2, 2021

The historic Gulf Freeze in February disrupted supply of many chemicals for months to come. Long-lasting plant outages had major repercussions in the US Sodium Hydroxide market (as well as many others). Rebuilding depleted inventories has been a months-long effort, as production capacities lost continue to be restored.

Then, another major weather event hit the Texas / Louisiana Gulf Coast mid-May, this time in the form of a slow-moving cluster of thunderstorms. Major flash flooding resulted, as total rainfall from the storm measured in feet- not inches- in what become one of the wettest days in the area’s history. At least one major chlor-alkali producer experienced debilitating flood damage, and had to shut down for several weeks to clean up.

Another producer experienced a brine pipe issue that resulted in a Force Majeure event.

The Sodium Hydroxide market has weathered the storms so far, and capacity has been restored in the main. But these unplanned outages and Force Majeure declarations hindered production, extended lead times, and resulted in overall tightness of supply in the market.

To top things off, strong demand for Sodium Hydroxide in sectors such as Alumina and pulp & paper have reinforced this market condition. Price increases have been issued by multiple producers and are taking effect. For questions about the current situation of the Sodium Hydroxide market and how it may affect your business, reach out to a representative today.

Polar Storms Paralyze Chemicals

February 19, 2021

MANY chemicals have been severely affected by the winter storms Uri and Viola that rocked the Gulf Coast region this week, including Propylene Oxide, Propylene Glycol, Hydrocarbons, Acetone, Isopropyl Alcohol, P-series Glycol Ethers, E-series Glycol Ethers, Chlorine, Caustic Soda, and Hydrochloric Acid, to name a few. The weather crisis has caused dozens of plant outages, a flurry of Force Majeure notifications, and in some cases a shortness of supply. Products are delayed as large percentages of US capacity are offline- Ethylene 65%, Propylene Oxide 49%, Ethylene Glycol 89%, and etc.

This historic winter storm in the Gulf Coast has further exacerbated an already tight situation on Propylene Oxide and derivatives- see: Rising Propylene Shifts Market for IPA, Other Chemicals. The further impact of the storms is likely to be massive on a market already at 10-year-highs, and could take many weeks to resolve.

For questions on how this will affect your chemical supply and/or price, reach out to a sales representative.

Rising Propylene Shifts Market for IPA, Other Chemicals

February 10, 2021

The US Isopropyl Alcohol market has been a sideshow of its own against the backdrop of the COVID-19 pandemic. Commonly used for sanitization, IPA’s initial extraordinary price leap left market players staggered. Then, just as suddenly, a dramatic slide as the need was met, that brought pricing nearly back to pre-pandemic levels. Where will it end? What will it do next?

Since there are several ways to make Isopropyl Alcohol, factors that affect the US IPA market are numerous and varied… hence the wild ride! Changes in prices of feedstock materials (i.e. crude, propylene), planned and unplanned plant shutdowns, and of course, the supply and demand shifts caused by the pandemic all can have repercussions in the market.

IPA prices hit their lowest point since the start of the pandemic in the last weeks of 2020 (essentially returning to pre-pandemic levels). Since then, prices have bounced up again, on a rapidly upward trajectory. This time the increase is caused by the rising cost of feedstock propylene. Overall, propylene has nearly tripled in cost over the past ten months, and continues to rise steadily. Propylene is a derivative of crude oil, which has risen substantially in the past few weeks especially following the vaccine announcement. Additionally, it is a by-product of gasoline production, constraining supply due to lack of demand for fuel. Other market factors like planned outages for maintenance are expected to tighten propylene supply for the first half of the year, and to top things off, demand for propylene remains strong for packaging and many other derivatives.

Multiple increases have been tabled by producers, and are taking effect. Also affected by the rising cost of propylene? P-Series Glycol Ethers, Propylene Glycol, and Acetone.

What’s next? Chemical markets are very volatile right now. While IPA prices are certainly on an upward climb, we don’t expect to see the dizzying high prices we saw last spring. And although demand for IPA remains steady and strong, we don’t foresee the dramatic shortness of supply again, either.

At CORECHEM we continue to monitor the situation. For questions about how this may affect your chemical supply/price, get in touch with a sales representative. We look forward to working with you!

Hydrochloric Acid Makes a Comeback

December 1, 2020

For the past eight months, the US Hydrochloric Acid market has been plagued by soft demand, plentiful supply, and 4-year-low prices. Now, with the return of cooler temperatures, the market has shifted.

Hydrochloric Acid is a corrosive mineral acid, and one of the cheapest and most widely used commodity chemicals due to its high versatility. It may be produced intentionally (i.e. as a part of the chlor-alkali process, “on-purpose acid”) or as a by-product of another product. Both on-purpose acid and by-product acid have had supply outages in recent weeks. This large reduction in supply has caught up with and finally overtaken the softened demand condition existing in the market, leading to price increases and even supply issues for some marketers.

What kind of supply outages? A little bit of everything actually! Multiple producers had unplanned outages due to hurricanes. One major producer had to declare force majeure. Several by-product producers had planned shutdowns for plant maintenance. And Chlorine, a pre-cursor to Hydrochloric in the chlor-alkali process, has become tight. Since there are many outlets for chlorine, it makes sense for a chlor-alkali producer to shift production away from less profitable Hydrochloric Acid and divert the same chlorine molecule to more profitable applications such as plastics. PPE and other downstream derivatives continue to command higher prices due to overall stronger demand. Essentially, the low market price of Hydrochloric Acid led to producers not being able to cover costs of producing it, and therefore has become unsustainable.

While these events may impact your Hydrochloric Acid price, CORECHEM does not foresee supply issues. With further questions about how the market shift may affect you, reach out to a sales representative today.

Plant Issues Cause Propylene Glycol Hike

October 29, 2020

LyondellBasellEarlier this month, a leak developed in a Propylene Oxide refining column at LyondellBasell. Force Majeure has been declared by LyondellBasell on all Propylene Oxide derivatives as they have been forced to significantly cut production as a result. As Propylene Oxide is a precursor to Propylene Glycol, this plant issue has had immediate impact to Propylene Glycol.

LyondellBasell is one of just a handful of US Propylene Glycol manufacturers, and a large and key part of PG supply in the US. The situation could be several weeks before back-to-normal. In the meantime, Lyondell’s customers are on 70% allocation, and increases are taking effect.

For further questions about how this may effect your Propylene Glycol supply and/or price, reach out to your sales representative today.

Acetone Enjoys Pandemic Popularity

July 1, 2020

Pandemic-related products are all receiving a tremendous amount of popularity right now, for obvious reasons. Who knew that Acetone is an essential ingredient for several of them?

That’s right. Hand sanitizer, face shields, and protective barriers all require this ketone solvent for production.

“Hand sanitizer made with Acetone??!!??”

No, Acetone is not a disinfectant and is not used as the active ingredient in any sanitizer! However, hand sanitizer is commonly made using Isopropyl or Ethyl Alcohol as the active ingredient. One of the 3 ways of manufacturing Isopropyl Alcohol is the catalytic hydrogenation of Acetone.

Another popular product right now is plastic, used for making face shields and protective barriers. MMA (Methyl Methacrylate) and other acrylics are commonly used to make these plastic products. According to IHS Markit, Methyl Methacrylate is the second largest end use for Acetone in the world.

Overall, the COVID-19 pandemic has resulted in a significant uptick in demand for Acetone, efficiently using up years of a supply glut in the U.S. Acetone market. (See Acetone Glut Likely to Last).

This is not the only effect COVID-19 has had on the Acetone market. In addition to creating noticeably heavier demand, Coronavirus has also had a hand in reducing Acetone production.

A co-product of Phenol, Acetone plants do not run only to meet Acetone demand. They primarily run to meet Phenol demand. Prior to the pandemic, Phenol/Acetone producers were pressing to meet high demand for Phenol. Now, Phenol demand has plunged amidst the COVID-19 economic slump. Major Phenol uses include plywood and oriented strand board (OSB) used in construction, which has taken a significant hit. Accordingly, plants have scaled back production in response to the decreased Phenol demand.

The net result? The U.S. Acetone market is no longer in an oversupply situation, and prices are on the rise. Some producers find themselves unable to fulfill all their contractual demands. On the positive side… market prognosticators view this as a situation that could ease in the coming months, as supply meets demand for COVID-related products and construction demand picks up.

With further questions about the U.S. Acetone market, and how this may affect you, reach out to your CORECHEM sales representative.