Companies shuttering

Exxon Mobil Corp., the second-biggest U.S. chemical producer, Lanxess AG and Nalco Holding Co. shut Texas plants as Hurricane Rita threatens to disrupt about half of U.S. chemical output.

The Baytown plant, one of the world's largest ethylene facilities, and a smaller plant in Beaumont were closed, Exxon Mobil, based in Irving, Texas, said Thursday in a statement. Dow Chemical Co., the biggest U.S. chemical producer, Wednesday shut the Freeport plant, its largest.

The facilities account for 13 percent of North American capacity to make ethylene, the most common building-block chemical used to make everything from plastic bags to electronics. Lanxess, based in Leverkusen, Germany, on Thursday closed plants that make synthetic rubber and chemicals. Nalco, based in Naperville, Ill., a maker of water-treatment products, shut its Freeport facility.

Rita is headed for the center of U.S. production and will likely reduce at least half of the output of many basic chemicals, Gary Adams, president of Chemical Market Associates Inc., a Houston-based consultant, said in a telephone interview. "The track this storm appears to be taking is the track that has the largest impact on U.S. petrochemicals interests," he said.

Rita is headed toward the Texas coast. It is forecast to reach land late today or early Saturday.

Plants near the Gulf Coast account for about 64 percent of U.S. ethylene capacity and 94 percent of capacity for vinyl acetate monomer, an ingredient in vinyl plastics, Merrill Lynch fixed-income analyst Roger Spitz said Thursday in a note.

The area also has 46 percent of chlorine capacity, 64 percent of polypropylene plastic capacity and 57 percent of the capacity for styrene, which is used in plastics, Spitz said.

Dow Chemical, based in Midland, Mich., also shut plants in Deer Park, Clear Lake, LaPort, Texas City, Seadrift and Houston. Texas has the largest concentration of Dow Chemical facilities, spokesman Chris Huntley said.

Deutsche Bank analyst David Begleiter reduced his second-half 2005 profit estimate for Dow following the shutdowns. The Freeport plant can produce 23 percent of Dow's global output, he said Thursday in a note to clients.

"The good news is these and other shutdowns further tighten an already tight petrochemical market," Begleiter said in the note. "This will drive continued upward momentum in selling prices and, we believe, margin expansion in fourth quarter." He rates Dow shares "buy."