Dow, BASF and many other giants have declared force majeure one after another!

May 9, 2022

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Global raw material prices continue to rise, and overseas chemical giants have announced official price increases since May, but after entering May, prices have indeed risen, and foreign chemical giants have issued force majeure announcements. There is no stock at a price, which will inevitably lead to a short-term surge in the prices of global chemical-related products.

On May 6, BASF announced on its official website that in a letter to customers, BASF announced a force majeure declaration on the supply of polyether polyols and polyurethane systems based on these polyols in Europe, the Middle East and Africa. Due to the inability of BASF Dow HPPO to deliver the established propylene oxide products, this will prevent BASF from confirming the order status of May and June, and BASF cannot guarantee whether the confirmed orders will be fulfilled.

The BASF Dow HPPO production company located in Antwerp, Belgium was jointly established by BASF and Dow. It mainly produces propylene oxide with a production capacity of 300,000 tons per year. The plant also provides raw materials for BASF's polyol production line. The company has not solved the technical failure problem for a long time, and 20 BASF products will be affected.

On April 29, Dow also issued an emergency notice saying, "Affected by the accident of a supplier of upstream raw materials, its ability to supply key raw materials to Dow's business was interrupted. Affected by this, Dow's propylene glycol supply declared force majeure and resumed. Time to follow up!"

On May 6, Americas Styrenics (AmSty), a mainstream North American polystyrene producer, stated in a letter to customers that "in light of recent production issues and supply chain challenges, it is conducting a distribution process for its polystyrene products. It is expected that by 6 May will reduce order volumes and limit availability. The PS allocation is due to a prolonged reduction in styrene production due to unexpected operational issues at its St. James, Louisiana styrene monomer plant on April 27. Plant issues also led AmSty to announce its feedstock styrene and the delivery of ethylbenzene is force majeure.”

In addition, TotalEnergie recently stated in a letter to customers that "TotalEnergie has declared force majeure on North American PP products due to a shortage of additives required to produce certain grades."

ExxonMobil has also issued force majeure on PP products, with Exxon Mobil saying in a letter to customers that "due to current operational constraints, it will begin to allocate sales of specific PP grades."

Entering May, under the complex environment such as the conflict between Russia and Ukraine and the Fed’s interest rate hike, the high cost of raw materials has brought cost pressure to global chemical companies. However, chemical giants have issued force majeure declarations, and it is impossible to deliver in May and June in the short term. In that case, the gap between supply and demand of overseas chemical products will increase for at least two months, product prices will continue to rise, and the huge price difference between domestic and overseas chemical products is expected. Domestic chemical raw material companies also Will adjust the price, increase export profits.

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