Hurricane Ike Idles Almost all Ethylene Production in Texas

---

Researched by Industrial Info Resources (Sugar Land, Texas)-- As hurricane Ike continues to shift course, chemical plant owners from Corpus Christi, Texas, to as far north as Port Arthur, Texas, have ceased operation in preparation for the season's potentially largest yet hurricane. By Tuesday evening of this week ethylene and chemical plant operators in the Southern portion of the Texas were already shutting down plants in Corpus Christi and Port Lavaca, Texas, as these areas appeared to be among the most likely for the landfall of hurricane Ike. Over the last 48 hours the track for hurricane Ike has shifted considerably further north and caused the shutdown of hundreds of chemical, refining and industrial plants in the Houston ship channel and all of the surrounding industrial communities.

The ethylene market will be especially hard hit by this storm. A total of 32 ethylene units located across Texas and Louisiana are currently down including several still offline as a result of the recent hurricane Gustav that came through the area only two weeks ago. This is one of the largest amounts of ethylene capacity to ever be offline simultaneously in recent decades. Even hurricanes Rita and Katrina didn't pull this much ethylene capacity offline as those storms each took much more direct paths on the Texas or Louisiana coast lines. There are only 46 ethylene units still in operation in all of the United States and Canada today compared to nearly 55 less than eight years ago. Having 70% of these units offline at the same time is going to have a short term affect on the ethylene market.

Depending on the level of damage that this storm brings many of these plants could come back online early to mid next week while others that loose power for any significant length of time could take weeks to restart. Excessive wind damage to any of the ethylene assets located in the storm's path could feasibly keep production offline for weeks or even months as was the case after hurricane Katrina.

The ethylene market tightened early this month with the idling or closure of ethylene capacity from the past two storms and this hurricane could put a significant strain on long term demand as inventories are already below normal. There are a long list of chemicals, polymers, fibers and higher olefins all dependent upon ethylene as a primary feedstock. Each of these commodities is ultimately in demand from a consumer or industrial market. Any major disruption in ethylene supply could have dramatic affects on a lengthy number of downstream products and markets.

Industrial Info tracks will continue to track the progress of hurricane Ike and its affect on the industrial market as part of its North American Plant database.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.