Tropical Storm Hilary Wreaks Havoc in California: Supply Chain Disruptions and Price Impacts Feared

Los Angeles, (US): Heavy rain battered California on 20th August 2023, as Tropical Storm Hilary flew in from Mexico, bringing warnings of potentially life-threatening flooding in the typically arid southwestern United States (US). In addition to the tropical storm that triggered tornado warnings, wildfires and a moderate earthquake occurred north of the Southern California town of Ojai. Thankfully, there have been no immediate reports of any damage or casualties.

Hilary's center was located in California, with sustained winds reaching a maximum speed of 60 miles per hour (95 kilometers per hour). After barrelling up Mexico's Baja California Peninsula, the US National Hurricane Centre (NHC) reported the tropical weather event, which was rare for southern California. The storm was moving briskly at 23 mph (37 kph). According to the ChemAnalyst, Hurricane Hilary will likely impact the supply chain in Southern California, the ports of Long Beach and the Ports of Los Angeles, and the metro areas of San Diego over the weekend and early next week. Additionally, Hurricane Hilary will force the manufacturers to close their manufacturing firms or reduce their operating rates, which might increase the prices of several commodities, including Petrochemicals and Elastomers. Meanwhile, ChemAnalyst reported that US Coast spot refined product prices have remained elevated as refinery operations in California have been impacted.

According to meteorologists, Hurricane Hilary has intensified into a Category 4 hurricane while moving along Mexico's Pacific shoreline. Predictions suggest the storm might result in severe and risky flooding across Baja California and the Southwestern United States until the beginning of the following week, as the National Weather Service indicates. In addition, tropical Storm Harold has reached land on Padre Island, Texas. The U.S. National Hurricane Centre (NHC) reported that the storm is expected to bring substantial rainfall and tropical storm-level winds in the next several hours. However, in response to the storm's impact, the Port of Los Angeles has taken proactive steps. These measures include communication and collaboration with the International Longshore and Warehouse Union (ILWU) and the relocation of ships to offshore anchorage points for safety reasons.

According to the ChemAnalyst market intelligence team, Hurricane impact on US port chemical trade activities can cause closures, labor shortages, and shipping delays. Supply chain disruptions from delayed or damaged shipments may lead to reduced chemical supplies and rising prices due to stable or increased demand. Increased storage costs and changing demand patterns could further influence prices to edge toward the higher end. Moreover, damaged infrastructure and insurance claims may compound the effects, while market adaptability will also play a major role in determining the extent of price fluctuations.