Chemical producers in US Gulf brace as TS Laura upgraded to hurricane

LONDON (ICIS)–The major storm approaching the US Gulf Coast has now been upgraded to a hurricane, the National Hurricane Center (NHC) said on Tuesday.

Petrochemical and oil producers are bracing for the impact of Hurricane Laura on segments of the upper Texas and southwestern Louisiana coastlines on Wednesday night local time, with the storm expected to move inland early on Thursday morning.

The NHC issued a statement at 07:15 CDT (13:15 BST) on Tuesday stating the tropical storm had become a hurricane.

“NOAA [National Oceanic and Atmospheric Administration] hurricane hunter aircraft data indicate that Laura has become a hurricane with maximum sustained winds of 75 mph (120 km/h), with higher gusts,” it said.

Source: NHC

The hurricane watch extends from the San Luis Pass, Texas to west of Morgan City, Louisiana, and a tropical storm watch has been issued between the San Luis Pass to Freeport, Texas.

The area from South of Port Bolivar, Texas to the San Luis Pass was issued a tropical storm watch, but this has been upgraded on the back of fears of a hurricane.

In addition to high sustained winds, dangerous storm surge coupled with the tide could cause normally dry areas near the coast to become flooded as rising waters move inland from the shoreline.

Many petrochemical companies have production plants in the region, strategically located near competitively-priced feedstocks.

Key producers across the value chain including LyondellBasell and BASF are continuing with industrial activity in the region, but are monitoring the situation and have plans to adapt as things progress.

Upstream activities from Phillips 66 and ExxonMobil are also maintaining normal refinery operations, with plans of modifying production if the severe weather conditions continue.

Across the value chain companies are adopting a similar wait-and-see approach, including styrenics producers, Canada-headquartered Methanex and NOVA Chemicals.

More specialist companies may mark a bigger impact on supply as sole US melamine producer Cornerstone Chemicals prepares to stop production if necessary, while the Louisiana Pigment Company has already taken precautionary action.

In balanced trading conditions, a sudden stop of production could unbalance market fundamentals and bring about sudden changes to pricing in the industry, but this has not happened in this instance.

Weak oil demand in the wake of the pandemic pitched against readily available material has alleviated any feedstock cost volatility.

According to the American Chemistry Council (ACC), US chemicals production remains significantly down compared to the previous year.

Tropical Storm Marco made landfall at around 20:00 CT (01:00 BST on Tuesday) but the impact of this weakened to a tropic depression according to officials.

The next NHC update is expected at 10:00 CDT.

Updates with tropical storm being upgraded to hurricane

Additional reporting by Graeme Paterson

Thumbnail picture: A swell hits Havana, Cuba, due to the proximity of Tropical Storm Laura, expected to make landfall on the US Gulf Coast as a hurricane on Wednesday. Source: Yander Zamora/EPA-EFE/Shutterstock