US Chlor-Alkali Supplies to be Impacted after Westlake Chemical Declares Another Force Majeure
- Journalist: Jaideep Kumar
In a recently released letter to its customers, Westlake Chemical declared force majeure (FM) at its Chlor-Alkali production unit of capacity 0.3 million mt/year based in Natrium, West Virginia. The company stated that the production has been directly and adversely impacted by sudden and unexpected failure of a critical piece of processing equipment. The letter also mentioned that the duration for the FM remains unclear as of now.
Westlake already has a turnaround underway at one of its three chlor-alkali units in Lake Charles, Louisiana which is expected to complete in and around mid-June.
The company also declared force majeure at its membrane-grade Caustic Soda facility after a third-party brine pipeline burst that serves the company's Geismar, Louisiana, complex. The FM came into effect on 18th May. Although, the pipeline was repaired on May 24, 2021.
Earlier, on May 19th, 2021, Formosa Plastics had declared FM after torrential rain flooded its 0.736 million mt/year chlor-alkali unit at its Point Comfort, Texas, complex.
These unplanned turnarounds have sparked a wave of uncertainty amidst downstream consumers. US is already facing a rare shortage of Chlorine tablets after Hurricane Laura knocked down key producer, BioLab’s, Lake Charles, Louisiana facility. The plant is expected to resume production in 2022. Chlorine supply in the US remains critical since February when Olin faced setbacks in chlorine production in the aftermath of the polar storm. The situation has been exacerbated by force majeures announced by several merchant Chlorine and Chlor-Alkali manufactures who had been selling Chlorine on allocation.
Production hindrances at chlor-alkali plants have directly impacted the supplies of Caustic Soda, a key feedstock for alumina and paper industries and obtained as a by-product during Chlorine production. Chlorine is an important raw material for Polyvinyl Chloride (PVC) production and is also used for chemicals like bleach, epoxy, hydrochloric acid etc.
Acute tightness in supply and series of plant turnarounds could be seen sending ripples to the price of Caustic Soda which is currently trading around USD 330/mt FOB Texas.
As per market experts, shortness in Chlorine supply could affect the downstream PVC production which is improving due to surge in construction activities since March. Westlake lifted its February force majeure on PVC on June 1st however, things seem uncertain as the latest force majeure may cause hindrances in raw material availability for PVC production.