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Impact of Hurricane Harvey on US Carbon Black industry

My thoughts and prayers go out to all of the people affected by Hurricane Harvey. The images of not only the devastation but also the resilience and generosity of the people of Texas and Louisiana is humbling.

Here is an update on the effect that the hurricane is having on the US carbon black industry. Concern has been high as nearly 80% of US carbon black capacity is located in Texas and Louisiana and supplies in the US market are already tight.

As of Thursday morning, Harvey — now downgraded to a Tropical Depression — was over northern Louisiana on a northeasterly route that will take it through northern Mississippi and central Tennessee and into West Virginia/southern Ohio by Friday evening. The storm made its final landfall around 3:30 AM CDT Wednesday morning near Cameron, Louisiana, which is about 240 miles west of New Orleans.

The path of the storm raised concerns about four CB plants:

  1. Orion Engineered Carbons’ plants in Orange, TX and Ivanhoe, LA

  2. Cabot Corporation’s plant in Franklin, LA, and

  3. Columbian Chemicals’ plant in Franklin, LA

Of these, Orion’s Orange, TX plant was most directly in the storm’s path. On Wednesday afternoon, company sources indicated that Orange had to be shut down temporarily due to an external power outage. Around noon on Thursday, company sources said that power would be restored on Thursday afternoon and the plant restart process would begin immediately thereafter. The plant itself sustained no damage, and raw material supplies are secure. The three coastal Louisiana plants (Orion Ivanhoe, Cabot Franklin, and Columbian Franklin), which are grouped close together just west of New Orleans, were largely unaffected.

Additionally, two US CB suppliers with office space in Houston reported no flooding and expected office hours to resume soon.

With carbon black capacity largely unaffected, the longer term effects of the storm relate to three issues:

1. Feedstock issues: more than 30% of US refining capacity was directly affected by the storm, particularly in the Houston, Corpus Christi, and Baytown areas but also in Beaumont and Port Arthur. Potential issues include flooding, disrupted crude oil supplies, and power outages. Despite these issues, as of Thursday, none of the CB suppliers I spoke with had been notified of potential problems with feedstock deliveries, but obviously those issues may still arise as refining capacity is assessed.

2. Other raw material issues: It is possible that the storm may cause shortages of other key raw materials, including butadiene and synthetic rubber, and that may cause problems for tire plants that would affect carbon black deliveries.

3. Logistical issues: Shipping channels, rail lines, and trucking routes have been affected by flooding. No word yet on severity, but obviously these issues could reverberate down the entire supply chain over the next few weeks.

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