PETROCHEMICALS
The petrochemical industry is facing tough times with the credit crisis continuing to impact producers by slowing demand and generating overcapacity, says Stacy Methvin, v.p./supply strategy and portfolio at Shell Chemicals’ downstream business. “Higher oil and gas prices have also
■ Canpotex Raises Korean Contracts Canpotex, which exports potash for Canadian producers, says it will increase Asian potash prices to $900/m.t. cfr Korea for the first half of 2009. Current prices were not disclosed.
■ Chevron Phillips Shutters Cracker Chevron Phillips says it has idled one of its ethylene units at its Sweeny Plant at Old Ocean, TX. The decision is a result of weak ethylene demand, the company says. It did not disclose an anticipated restart date.
■ Vinythai Cuts PVC Production Vinythai (Bangkok) says it will cut its polyvinyl chloride (PVC) production capacity by 25% and reduce output at two units, due to the economic slowdown. Production of vinyl chloride monomer and caustic soda will each be reduced by 50%, the company says. Vinythai’s plants are at Map Ta Phut, Thailand.
expanding manufacturing base in the high-growth markets of Asia/Pacific.
Asia is the fastest-growing ethylene feedstock market due to rapid industrialization and booming economic development. The region has an ethylene demand growth rate
increased energy and feedstock costs,” which of 5.9%/year, far surpassing North American means “belts are tightening and we need to growth of 2.6%/year. “We anticipate contin-get more efficient,” Methvin tol d attendees at ued growth in China will lead to an enormous a Société de Chimie Industrielle amount of demand over the next presentation, held recently in few decades,” Methvin says.
New York. There is a concern that cer-The global crude distillation tain North American commodity capacity addition rate “outstrips petchem producers may be put out total oil product demand growth,” of business by increasing exports Methvin says. “For a long time, from the many Mideast plants that capacity wasn’t being built; the are coming onstream. “New players, industry was barely keeping up including private equity investors, with demand, and there were huge Methvin: ‘Belts are and companies from major resource margins. Starting in 2009 and tightening.’ holding countries such as [Saudi continuing onward, capacity is going to out- Arabia’s] Sabic and Iran’s NPC, have entered weigh demand,” she says. the market and are coming onstream in a big The North American landscape for ethylene way,” Methvin says. supply and demand has changed dramatically Mideast companies’ business drivers are during the past 20 years, Methvin says. The different from those of the more established once-strong derivatives export market as a petchem firms. “The focus is on cash and percentage of capacity has constantly declined cost,” Methvin says. “Mideast companies now since the mid-1990s, as North American have the money, operational know-how, and exports faced an increasingly competitive project experience. The question is—will they challenge from Mideast production and an still need U.S. partners?” —lindsey bewley
DIGEST
■ Nova Chemicals Idles Styrene Plant Nova Chemicals says it has temporarily closed its Beaver Valley styrenic polymers plant at Monaca, PA due to poor market conditions. “We expect to restart the plant, but only when we see significantly stronger demand in improving margins,” says Robert Snyder, v.p./performance styrenics.
Ethylene Prices Plummet U.S. ethylene contract prices dropped by an unprecedented total of 25 cts/lb for the months of October and November. The decline reflects a collapse in demand and in feedstock costs, market sources say. The combined price drop covers a 12-cts/lb decrease for October contracts and a 13-cts/lb drop for November. Contract prices for November are 38 cts/lb, down 40% from September. Declining ethylene prices are starting to catch up with falling raw material costs and, with spot ethylene trading in the low 20s cts/lb, average ethylene margins will likely contract to less than 5 cts/lb in November from 21. 5 cts/lb in October, says David Begleiter, analyst at Deutsche Bank (New York). October ethylene margins appear
robust, but volumes were very weak due to massive downstream inventory destocking, Begleiter says. Ethylene volumes continue to be very soft in November with overall fourth-quarter volumes forecast at a 10%-20% decline, he says.
■ Tata Halts Soda Ash Expansion Tata Chemicals (Mumbai) says it will put on hold a $30-million expansion of soda ash capacity at Mithapur, India because of weak market conditions. Tata had planned to expand the Mithapur soda ash plant from 975,000 tons/year, to 1. 2 million tons/year.
Kuwait Ethylene Plant Starts Up Equate Petrochemical Co. (Safat, Kuwait) says it has started up an ethylene plant at the company’s Olefins II complex at Shuaiba, Kuwait. The plant has production capacity for 850,000 m.t./year of ethylene. The unit will supply ethylene to plants at the complex producing ethyl benzene and styrene, and to polyethylene (PE) and ethylene glycol (EG) units that have been expanded. The Olefins II complex’s EG unit has capacity for 600,000 m.t./year and uses Dow Chemical’s Meteor process technology. The complex’s PE capacity will be expanded by 225,000 m.t./year to 825,000 m.t./year as part of the Olefins II project (CW, Nov. 28/Dec. 5, 2007, p. 29).
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