US rubber industry hit by Texas hurricane

Houston, Texas – Hurricane Harvey, which struck the southeastern coast of Texas as a Category 4 storm late 25 Aug and made landfall again 30 Aug in western Louisiana as a tropical storm, has proved to be a major crisis for the synthetic rubber and rubber chemical manufacturers in the region.

Virtually all synthetic rubber producers along the Gulf of Mexico are now shut down, according to Bill Hyde, senior director, olefins and elastomers at Houston-based IHS Markit.

"There isn't a lot of damage, because there was a lot of rain but not a lot of wind," Hyde said. "Logistically, however, it's a mess."

Travel and shipping in southern Texas and western Louisiana are now totally disrupted, according to Hyde.

"The rail system is in disarray," he said. "They need to inspect the bridges for damage, but they can't do that until the water recedes. Meanwhile, the Intercontinental Waterway is also shut down.

Hyde said he had no idea how long it would take to get production and shipping back to normal. "It's going to take a while," he said.

Both Dow Chemical Co. and ExxonMobil Corp. announced the allocation of $1 million (€840,000) to support both immediate relief and long-term recovery efforts in the region.

Impact on facilities

A Dow spokesman said the company has well-developed weather preparedness plans and safely shut down operations at its Seadrift plant before Harvey made landfall.

Its other manufacturing sites in Texas and Louisiana remained open during the storm, but infrastructure and logistics limitations may require adjustments in production rates, Dow said.

Dow has about 12,000 employees and contractors in Texas, and has safely accounted for all of them, according to the company. To help them during this period, Dow will offer interest-free loans and temporary housing as needed, it said.

Goodyear said it had closed all of its facilities in the Houston area by 26 Aug, except for one Goodyear tire & service centre staffed to serve first responders.

"Our chemical plants did not sustain significant physical damage, and we are still assessing the impact on other facilities as we're able to access them," Goodyear said.

Goodyear knows of no injuries to its Houston employees, but some suffered flooded homes or had to be evacuated, the company said. Goodyear's Emergency Assistance Program is designed to help with employees' needs during and after a natural disaster, including relocation, home repairs and inspections, shelter, food, clothing, and financial assistance, it said.

ExxonMobil said it safely shut down its facility in Baytown, Texas, but continued normal operations at its facility in Baton Rouge, La. It kept its Beaumont, Texas, facility open initially, but as of Aug. 30 had completed shutdowns of the chemical plant, polyethylene plant and refinery at Beaumont, it said.

The company did not comment on news reports saying there were toxic chemical releases at the Beaumont and Baytown refineries because of storm-related damage.

"ExxonMobil's primary focus continues to be the safety of its employees," the company said. It is communicating with employees and their families to ensure their safety, it said.

Officials at Kuraray America Inc., a Houston-based manufacturer of resins, chemicals, fibres and textiles, said it knew of no damage to Kuraray facilities or injuries to Kuraray employees as of 28 Aug.

Kuraray stopped or reduced production at some facilities to manage raw materials and finished product inventory, the company said. It hoped to return to normal production by 31 Aug or 1 Sept, it said.

The Houston-based office of the International Institute of Synthetic Rubber Producers was closed during the storm and aftermath, according to Juan Ramon Salinas, managing director of the association.

The IISRP had to cancel committee meetings scheduled for 29-31 Aug because of the storm, as travel was restricted, he said, and many of the members who were to attend also had to deal with hurricane-related situations at their facilities.

All IISRP staff members were safe and accounted for, Salinas said. He planned to try to reopen the institute's office Aug. 31 if highway access was clear by then.

Parker Hannifin Corp. said in a 30 Aug blog post on its website that it has 11 facilities and 356 employees in the greater Houston area across four of its operating groups, and has three locations in southern Louisiana. Parker facilities were still being assessed for damage and business continuity plans have been activated.

"Parker's first priority has been to make sure that all team members in the area are safe and accounted for, a process that is ongoing," the firm said. "A second priority is to do what we can to provide immediate support to our team members and to the region generally."

Parker initiated its Employee Disaster Relief Fund, which provides dollars directly to affected team members from the Parker Foundation. Parker has also teamed with the American Red Cross to establish an employee giving portal where Parker employees in the US can contribute financially to the relief efforts and have those dollars matched by the foundation. one for one by The Parker Foundation.

GHX Industrial LLC, a Houston-based distributor and fabricator of industrial gaskets and hoses, posted notices on its website 29-30 Aug that its facilities in Houston and Beaumont were closed because of flooding and impassable road conditions.

The Corpus Christi office would be open normal hours, but attendance was not mandatory, according to the notice.

"Please check your routes and never place yourself in danger," GHX said. "If you can safely make it to the location, please do so."

A spokeswoman for Eriks North America, another distributor of rubber-related goods with a large presence in the region said in an 30 Aug email that it continued to assess the situation and wasn't yet ready to make a statement on the storm's impact.

The Houston warehouse facility of Ryco Hydraulics Inc. has been running on a generator and a smaller-than-usual crew after being closed 28-29 Aug, according to Ryco marketing specialist Bart Hubernak.

"There was a decision Saturday night (26 Aug), and we were still just getting walls of rain Monday," Hubernak said. "There was just no way we could open the facility. We literally could not."

The rain tapered off enough by 29 Aug to allow some major roads to reopen, but the building was still without power 30 Aug, according to Hubernak. Some hourly workers and about half of senior management were able to make it in 30 Aug he said.

Gordon Duff, Ryco vice president of operations, communicated constantly with employees to make sure everyone was safe, according to Hubernak. The company also connected with customers to make them aware of delays and closings, he said.

There were a few leaks, but no product was damaged, according to Hubernak. There is no official word on when electricity or freight service would be available again, but Ryco hoped to be back to normal operations in a day or two, he said.

Moving forward

There were heartening signs that refinery operations in Corpus Christi would recover very soon, but the refinery situation in Houston — which was expected to get another 8-12 inches of rain over the next several days — is far more uncertain, according to an 30 Aug report on Hurricane Harvey issued by IHS Markit.

Also, some shutdowns or operation reductions can be expected soon at Baton Rouge, the report said.

"Together, the affected facilities represent more than 30 percent of US refining capacity," according to IHS Markit. Some Corpus Christi capacity amounting to some 800,000 barrels a day was expected to restart very shortly, but even then it would take several days before normal production rates could resume, it said.

Texas accounts for 70% of total US production of ethylene, and 92% of propylene production is concentrated in facilities along the Texas-Louisiana coastline, according to the report.

There also is major production of polyethylene, polypropylene, benzene, chlor/alkali vinyls and methanol in the area, it said.

History suggests that hurricane-related supply disruptions yield higher product prices, and as such IHS Markit is currently reassessing our price forecast through the end of 2017," it said.