Please enable JavaScript
Email Marketing by Benchmark

Global Petrochemical Supply Chain Update
By Matthew Bodoff  on 4/7/21

In early March, ISFA released an industry news update around supply chain issues from winter storm Uri and how it has affected the North American petrochemical supply chain, and in turn, affecting the surfacing industry. The hope was these changes would be a contained, short-lived blip in the supply chain. But now it looks like the entire industry is in for a few more months of panic and shortages.

In mid-March, Tecnon OrbiChem, a chemical industry research firm, published an update to show how the effects of winter storm Uri will continue to affect supply chains for months to come.

Global benzene and styrene markets continue to be affected by the shutdowns in the Gulf Coast region and many factories have been slow to get back online. At one point, there was only one US plant able to keep running during the cold weather period. US Styrene values have increased by more than $500 per ton since the end of February.

Ethlyene production saw offline rates hit at least 70% through February, and as much as 50% production capacity was still offline as of early March. Prices have risen over $300 per ton.

Glycol and other derivatives were already in short supply following the 2020 hurricane season, and this year’s winter storms have made things worse. By mid-March, almost 50% of the nation’s ethylene capacity was still offline.

All of these raw materials are key ingredients into making the polyester resins that go into quartz slab and solid surface production. In addition, many of these raw materials go into the glues, adhesives, and coatings used across the surfacing industry.
And this isn’t just a US problem. In late March, CompositesUK, a major resin industry trade association, released an updated statement highlighting the European challenges to chemical supply. They highlight that 32 chemical suppliers are on Force Majeure affecting availability in the marketplace.

The major question now is, “When will this get better?” Unfortunately, there is no easy answer. Spring is the busy season for the composites, coatings and related industries, so demand has continued to be extremely strong despite shortened supplies. Further, a normal supply of imported raw materials from China and East Asia hasn’t been available to European and North American customers because of a strong demand in China. Acerbating the problem, is a global logistics strain with a lack of shipping containers, which are increasing freight costs and creating sea freight delays.

We, as an industry, have to be prepared for tight inventories, short supply and the eventual rise in prices as these supply problems ripple through the chain.

Additional resources: