Texas February 2021 Storm Affect on Raw Materials
Texas Freeze Triggers Global Plastics Shortage
Numerous chemical plants were shut down as state lost power last month, disrupting a global supply chain for consumer goods
The February freeze that triggered mass blackouts in Texas led to chemical plant shutdowns that are disrupting global supply chains, causing a shortage of the raw materials needed for everything from medical face shields to smartphones.
The power outages brought the world’s largest petrochemical complex to a standstill, forcing more plants in the Gulf of Mexico region to shut down than during Hurricane Harvey in 2017. A month later, many remain offline, and analysts said it could be months more before all are fully back.
Prices for polyethylene, polypropylene and other chemical compounds used to make auto parts, computers and a vast array of plastic products have reached their highest levels in years in the U.S. as supplies tighten. For example, prices for polyvinyl chloride, or PVC, have more than doubled since last summer, according to S&P Global Platts.
That is expected to result in cost increases and delays for auto makers, home builders and countless other businesses, with impacts ultimately felt by consumers, according to companies and analysts. The shortages are part of a growing economic price tag of a storm that knocked out a third of natural-gas production in Texas and forced some chip makers to curtail output, exacerbating a semiconductor shortfall.
Honda Motor Co. said Wednesday it would halt production at most of its U.S. and Canadian car factories next week, citing supply-chain issues including the fallout from U.S. winter storms. Toyota Motor Corp. said it was recently informed that a shortage of petrochemicals will affect production at its car plants. Paint maker PPG Industries Inc. said a number of its suppliers have been affected by the problems in Texas. Container Store Group Inc. warned that the shortages could influence profit margins at the storage and shelving retailer.