Formosa Plastics Corporation Declares Force Majeure on HDPE Production in the US
- 24-Feb-2023 6:00 PM
- Journalist: Emilia Jackson
Formosa Plastics of the US has announced force majeure on High-Density Polyethylene (HDPE) resins for certain grades due to unexpected mechanical issues and production outages experienced by the firm at their high molecular weight bimodal HDPE production unit in Point Comfort, Texas, US. Meanwhile, downstream construction demand for the commodity in the week ending 24 February 2023 remained firm and led to a stable price trend of HDPE in the US market at higher values.
As per the market sources, Formosa Plastics declared force majeure on 22 February 2023 due to a production outage on their pressure pipe products, including certain grades of HDPE in Texas, US. As per the sources, Formosa is working to revive normal production as soon as possible, and they are evaluating the impact of this production cut on their operational capability to supply in the domestic and international markets.
On the demand side, the shortage of construction workers in the US exerted pressure on the downstream construction sector in February 2023 and, subsequently, impacted the pricing dynamics of HDPE. Moreover, with US President Joe Biden's approval, more than $1.5 trillion will be spent to strengthen the nation's infrastructure and catch up to China in the manufacturing sector. Additionally, the strengthening of product demand from the downstream housing and pipe manufacturing industry governed the current prices of HDPE in the US market. At the same time, the growth of the US construction sector will likely elevate the price momentum of HDPE further in March 2023 amid limited inventory availability.
As per the ChemAnalyst, the prices of HDPE are anticipated to follow an increasing trend owing to the expected improvement in the demand from the construction sector in March 2023. Moreover, manufacturers and suppliers may come under input cost pressure in the US market with an anticipated escalation in the upstream crude oil and feedstock Polyethylene, elevating production costs proportionally and will affect the final prices of HDPE.
