Shortage of plastic could force a “big fight for materials” after Texas winter storm

Petrochemical plants in Texas are still recovering from the historic winter freeze that struck the Gulf Coast late last month. This has lead to an increase in the price of plastic alongside a decrease in its supply, which is straining the production of a number of products that use plastic, including smartphones, face masks and automobiles.

The freeze left millions of residents in the state without power and clean drinking water for almost a week. The freeze had also damaged infrastructures, claimed lives and forced school closures. But with petrochemical plants still struggling to reopen, the deep freeze’s impact is now spreading across the nation and the globe.

Petrochemical plants struggling to reopen

Cliff Hoover, general manager of plastic fabrication company Confer Plastics, said facilities didn’t have enough time to properly shut down when the storm hit. Due to the winter storm, the plastic polymers froze inside pipes in the plant. So workers need to clean out the entire plant before resuming production.

But reopening petrochemical plants isn’t as simple as it sounds. If rushed or done improperly, reopenings may lead to fatal consequences.

“People assume it’s just as simple as flipping a switch,” said Hector Rivero, president of the Texas Chemical Council, a trade association of chemical manufacturing facilities.

Major facilities that deal with hazardous materials and extreme temperatures or pressures should be handled with extreme care.

Texas is one of the biggest exporters of petrochemical products and plastic in the United States. But even prior to the freeze, the Gulf Coast’s petrochemical industry was already struggling because of an active 2020 hurricane season, which strained production.

As such, last month’s freeze only worsened the supply chain disruptions that surfaced last year. The Texas freeze caused the production of 75 percent of polyethylene, 62 percent of polypropylene and 57 percent of polyvinyl chloride (PVC) to shut, according to The Wall Street Journal.

In turn, prices for polyethylene and polypropylene saw their biggest and fastest jump in at least a decade. They likely won’t ease until later this year, according to industry experts.

Big fight for materials

Polymers are used in many everyday items, such as smartphones, cars, televisions, computers and even homes. They are also essential for many products that have been widely used since the coronavirus pandemic began, such as single-use face masks, face shields, disposable gloves and even containers for needles and vaccines.

With the significant increase in demand for such products amid disruptions in production, hospitals are facing a shortage of certain plastic medical equipment. Kim Anders, a supply-chain executive at the healthcare company Premier, Inc., said that medical and disposable sharps containers are harder to obtain.

The shortage may also extend to the real estate sector. Houses became a hot buy during the pandemic as many people adjusted to their work-from-home arrangements. The sudden demand pushed prices higher in the housing market. But the lack of materials needed to build houses is driving prices even higher.

“It’s going to get ugly,” warned John Schiegg of David Weekley Homes, a large home builder based in Houston. “There’s going to be a big fight for materials.”

Automobile manufacturers are also anticipating cost increases and delays after chip makers had to lessen their output, setting the stage for a semiconductor shortfall. (Related: Top selling vehicles are being held back, made without computers as semiconductor shortage sweeps the globe.)

Honda Motor Company, the leading Japanese manufacturer of motorcycles and a major producer of cars, even said that it would be halting production next week in most of its car factories in the U.S. and Canada, citing the fallout from the winter storm last month as one of the many supply-chain issues it’s currently facing.

Meanwhile, Toyota Motor Corporation, said it was expecting the shortage of petrochemicals in Texas to affect production at its factories.

In addition, retailers of plastic storage containers, shelves, bread bags, shipping sacks and other similar plastic products have warned that the petrochemical shortage could impact their store margins.

Follow Collapse.news to learn more about how the Texas winter storm impacted industries.

Sources include:

ZeroHedge.com

WGRZ.com