Hurricane Beryl Hits USGC: Impacts on LPG Market and Logistics
- Hurricane Beryl struck the US Gulf Coast on Monday, July 8th, as a Category 1 storm, a significant downgrade from its Category 5 strength in the Caribbean. Initially expected to make landfall in Northern Mexico, Beryl ultimately hit Houston directly, with its center passing just west of the city.
- The primary damages to the NGL market stemmed from power outages and temporary closures of inland infrastructure. The onshore and offshore facilities, including ports, terminals, and shipping assets, faced logistical delays. However, the inland infrastructure, being well-prepared for storm effects and power outages, experienced only temporary disruptions. The terminals and ports, dealing with assets highly sensitive to the impact of storms, faced more significant challenges.
- In terms of supply and demand, the effects were limited and relatively balanced between the loss of production and demand. The main impact was a drop in export volume due to logistical disruptions and temporary port closures. This led to an estimated loss of 0.3-0.4 million metric tons (mm t) or about 3,500-4,500 thousand barrels (mb) of LPG export volume compared to pre-Beryl expectations.
- Consequently, US Gulf Coast inventory levels increased more than anticipated, serving as a balancing mechanism for the lost export volumes.
- The Panama Canal also felt Beryl’s impact; despite increased throughput slots in June and July, VLGC throughput dropped from about 13-15 vessels per week to just 10 during week 28.
- Hurricane Beryl acted as a simulation for potential weather disruptions in the US Gulf Coast from future hurricanes this season. As the first tropical cyclone to hit Houston directly, it highlighted that similar-level storms are likely to disrupt logistics more than inland facilities. However, a hurricane stronger than Category 1 could lead to more significant impacts.
