02 September 2008 15:27 [Source: ICIS news]
By Stephen Burns
HOUSTON (ICIS news)--US markets reacted cautiously on Tuesday morning to the relatively painless passage of Hurricane Gustav, which has apparently spared energy and chemical production facilities and also set crude oil prices plunging.
"So far, it appears the industry may have dodged a bullet on this hurricane," a polyolefin buyer said, although he added it was too early in the day to hear of any supply chain disruptions.
General sentiment held that the markets were facing a quite different set of parameters than when participants left their offices to start a long weekend on Friday.
"We are re-assessing," said one ethylene producer, who had not heard any specific damage reports.
Gustav appeared to have caused only minimal damage to the ?xml:namespace>
“Today is a day of assessment, not just for the port but for the city as a whole,” Bonura said.
If all goes well the port should be able to resume operations in a few days, versus weeks as was the case in 2005 with Hurricane Katrina, Bonura said.
The Houston Ship Channel reopened to traffic at 7:51
As of 8:50
Forecasts on Friday said Hurricane Gustav would make landfall on Tuesday morning and deal a powerful blow to a swath of production facilities in
Gustav did cause widespread flooding and blacked out large areas, but aside from the loss of power there have been no reports yet of serious damage to any production facilities.
Many refineries and chemical plants had been shut down ahead of the storm, which has relinquished its hurricane status as it moves further inland.
In one example, PPG Industries said its
"Over the weekend, plant managers implemented a controlled and phased shutdown of the facility," Maurer said. "Except for two power generator units, the entire plant was down and lines were cleared."
About 200 PPG employees volunteered to stay through the storm to ensure continued power capability.
The facility is now working on logistics for a start-up once city officials lift the evacuation order and the company can begin to bring employees back to work, which is expected to take three or four days.
The PPG Lake Charles complex manufactures chlor-alkali products, including chlorine and caustic soda, and employs about 1,300 people.
Likewise, Dow Chemical was still assessing its site in
Part of the company's Plaquemine site had been taken down, while the entire
US Gulf olefins buyers were hanging on the sidelines on Tuesday morning, waiting on firmer information.
There were no fresh bids heard in the ethylene or propylene markets, which were both supported on Friday by fears that Gustav might interrupt supplies.
Before the storm came on the scene, both markets were softening amid perceptions of plentiful supply, reflecting in part high operating rates as producers took advantage of improved margins due to the downtrend in oil and natural gas prices.
The overnight plunge in crude oil values would likely bring fresh pressure on price ideas, said one olefins buyer.
Soon after the opening of the regular session, New York Mercantile Exchange (NYMEX) front-month crude oil futures hit a low of $105.46/bbl, down $10.00 - or 9% - from Friday's close.
"Definitely down," said one east coast aromatics trader. "Benzene bids will be below $4.00/gal."
No fresh
Downstream, US polypropylene (PP) buyers had expected - prior to the emergence of Gustav - that contract prices to fall by at least 10 cents/lb in September on the back of weaker demand and feedstock pricing.
Domestic injection grade homopolymer was at 98.0-102.5 cents/lb
Polyethylene (PE) contract prices were expected to fall by at least 5 cents/lb, matching a similar trend in PE spot prices seen in late August.
($1 = €0.68)
(Additional reporting by Brian Ford, Leela Landress, David Barry, Brian Balboa, Steven McGinn, Al Greenwood, Heather Doyle, and David Rosen.)