If you are in the business of buying or selling chemicals under contract, you probably understand the merit of a force majeure clause in the contract. Literally meaning “greater force”, force majeure is essentially a declaration that a term, usually delivery, is not going to be met in an agreement owing to an “act of god” or other influence that is well beyond control or prediction. It’s not unheard of for a force majeure clause to be omitted in a supply contract. Both buyer and seller can benefit from this escape hatch when the sky falls.

Companies declaring force majeure in 2010 include Chevron Phillips on US olefins (ethylene cracker outage), Ineos on certain polyolefins (outage due to agglomeration in the reactor), Shell Chemicals on is Moerdijk styrene (ethylene supply problems), AkzoNobel on its Perkadox 14 line in Belgium (explosion & fire), Dow on phenol in the Americas (broken heat exchanger), Domo on its nylon 6 (feedstock supply shortage), Sasol on chemicals out of its Germiston, SA, plant (fire), Olin Corp. on its McIntosh, Alabama, Chlor-Alkalai plant (equipment failure), Cristal Global on its Stallingborough, UK, TiO2 operations (unspecified malfunction), BASF on acrilonitrile-butadiene-styrene (ABS) at its Tamaulipas, Mexico, site (butadiene shortage). Diethyl ether is also in short supply, but I am aware of no specific reason.

A few of these force majeure interruptions have been lifted already. Point is, it is always good to have multiple suppliers on line to provide supply of feedstocks. In regard to the olefin/polyolefin force majeure declarations, I wouldn’t be surprised if there wasn’t a bit of foot dragging that lead to a shortfall in capacity. Why keep all of your crackers in operation during the Great Recession?

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