Analysts: Harvey has 'paralyzed' a critical part of U.S. manufacturing supply chain

By Tom DiChristopher, for CNBC

Sep 07, 2017

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Many of the plastics and specialty chemicals that factories across the United States depend on are stuck on the Gulf Coast in the wake of Hurricane Harvey, threatening to create supply shortages and raise prices for U.S. manufacturers.

The U.S. Gulf Coast is home to about 90 percent of the nation's capacity to turn out base plastics, the building blocks for a wide range of consumer and industrial goods. Petrochemical plants that make the products and the rail companies that ship them are still restoring service after Harvey brought devastating flooding to southeast Texas.

"The supply channel is paralyzed currently," said Kathy Hall, executive editor at PetroChem Wire, an industry information service. "Plants are coming back, but we're not seeing anything moving out of the area."

About 60 percent of U.S. capacity to make the most widely used inputs, ethylene and propylene, remains offline, analysts say. These two products play the role in the petrochemicals industry that crude oil, the feedstock for gasoline and diesel, plays in the refining industry.

"You can't make very much without them," Hall said.

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