Get Ready for a Bumpy Ride

Reuters Image

The last time a major hurricane hit the gulf coast region was Hurricane Katrina in 2005. In the materials business, we watched polypropylene prices increase from the $.40/lb range to the $1.10/lb range in a matter of weeks.

Well, here we go again.

Hurricane Harvey hit the Texas gulf coast region on Friday night with a fury. As many of us discovered after Hurricane Katrina, the nations petrochemical industry resides in the gulf coast region and supplies of gas and oil and plastics can be severely impacted by a major hurricane hitting that area.

There are at least 2 dozen major refineries and plastics manufacturing facilities in the area where the hurricane hit (see map). Major polymer distributors are already getting a flood of force-majeure letters for commodity resins this morning. Here is a list of the facilities list that went down.

We can expect tight supplies for the next few months as well as price increases on many materials.

Oil refineries and polymer reactors do not turn back on with the flick of a switch and at this point I am sure that companies are just starting to assess the damage from Harvey.

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