Image Source: Getty Images/Akhmad Bayuri
[Excerpt of an AutoTechInsight by IHS Markit article]
The winter storm that hit the United States Gulf Coast (USGC)
region in the third week of February 2021 resulted in one of the
worst electric grid outages in the United States, leaving millions
of people without electricity and water for four days in the state
of Texas. The blackout, along with freezing cold temperature, also
forced almost the entire refining and petrochemical industry in
Texas and Louisiana to shut down operations. While the storm is
over and the recovery process is under way, it is inconsistent
across the industry, which, if prolonged, could threaten the supply
chain for many end-markets, including automotive.
The cold wave affected almost every propylene production
facility in Texas and Louisiana. The two southern states account
for about 75% of the all propylene capacity in the US. Propylene is
the second-largest volume chemical produced globally after
sulfuring acid. It is a precursor chemical whose derivatives are
critical raw materials for many industries, including the
automotive industry.
Polypropylene is used as a raw material in producing instrument
panel, bumper facias, fender liners, lighting, electrical housing,
door trims, and seating components.
Propylene glycols are primarily used in the resin component of
fiber reinforced plastics (FRPs). In automotive, FRPs are used in
high-strength, light weight, structural applications. Propylene
glycols are also used in coolants, antifreeze, hydraulic fluids,
and lubricants in multiple industries.
Proplyene Oxide, a derivative of Propylene, is a major chemical
component of flexible and rigid polyurethane foams. Flexible
polyurethane foams are used for cushioning in seats, headrests, and
armrests, as well as in furniture and bedding applications. Rigid
polyurethane and polyisocyanurate (PU/PIR) foam is utilized mainly
as an insulation material in construction.
Earlier this month, there were reports in the media that the US
automotive industry could face shortage in supply of seat foams.
However, no automaker or supplier has raised concern yet. Major
seating suppliers in the US, including Adient, Lear, Faurecia, and
Magna, also produces seat foam and currently may have enough stock
to manage production for the next few weeks.
According to Colin Giles, senior technical research analyst at
IHS Market, “While a shutdown caused by the propylene shortage is
unlikely at this time, suppliers and OEMs alike should be watching
the situation around this supply chain carefully, and keeping a
close eye on their own inventories of propylene derivatives. Any
setbacks in the restarting of these facilities could lead to
shutdowns if end-use suppliers, such as seat foam manufacturers run
out of their feedstocks. Regardless of how the restart and recovery
processes progress, suppliers of components that use propylene
derivatives should expect tight inventories and higher material
costs for much of 2021.”
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