US winter storm impacts on the polyester value chain

As the US deals with this week’s winter storm, refining and petrochemicals outages could have an impact on the global polyester chain, according to Wood Mackenzie.

Power and water outages have impacted much of Texas since 15^th February, although they are gradually being restored at the time of writing (18^th February). However, access to feedstock remains an issue as wellhead production freezes off, says Wood Mackenzie.

Salmon Lee, Wood Mackenzie Head of Polyesters, said: “The most affected products are paraxylene and monoethylene glycol. In the affected states, capacities of these two important building blocks for polyester production total 3.4 Mt and 4.99 Mt respectively.

“PTA plants in the US are located outside the disaster zone and are still running. However, this may change if paraxylene supply dries up amid the outages.

“For now, US polyester production is also reported to be business-as-usual. But again, uncertainty prevails in the raw material sector if either paraxylene/PTA and/or MEG supply runs dry. The status of polyester plants could change very quickly.

“Spot prices of paraxylene, PTA and MEG are already rising sharply in response to the escalation in crude prices. There are also concerns of an acute supply shortage for polyester feedstocks. The impact on PET and polyester fibre pricing will likely be significant.”

Genscape, Wood Mackenzie’s sister company, estimates that, as of 17^th February, 45% of total US paraxylene capacity was offline.

“If paraxylene dries up, PTA production will be adversely impacted, and the US will need to import much more to keep polyester operations going. However, paraxylene imports into the US were already expected to be lower from Europe given the supply tightness there, as well as from the Middle East due to ongoing maintenance in Saudi Arabia,” added Lee.  

US MEG capacity accounts for 10% of global capacity and the current weather situation will have ramifications beyond the US, reports Wood Mackenzie. “If US MEG production is cut, US exports of MEG will likely fall dramatically. The US may be forced to seek out imports to make up for this loss.

“Should US MEG plants in the Texas region remain down for an extended period, polyester production, PET resin and fibres could be adversely affected by the shortages. Downstream operations are looking at potential curtailment in various areas due to the winter storm or a lack of natural gas.

“Disruptions in raw material availability will have a significant impact on production and subsequently on PET resin availability as the North American PET resin market was already tight,” said Lee.