OxyChem declares PVC FM on ethylene shortage

26 September 2008 22:41  [Source: ICIS news]

HOUSTON (ICIS news)--US polyvinyl chloride (PVC) producer Occidental Chemical (OxyChem) extended a force majeure (FM) declared on PVC due to a shortage of feedstock ethylene in the wake of Hurricane Ike, the company said on Friday.

The FM declaration affects PVC and vinyl chloride monomer (VCM) produced by OxyChem and its subsidiary OxyVinyls, the company said. It remained unclear how long the measure would be in place.

“We extended the earlier FM because the problem of raw material,” Richard Kline a spokesperson for Oxy said. “We have partial production at our Deer Park PVC plant and our Battleground chlor-alkali plant, but the biggest issue for all our plants is availability or raw materials.”

Market participants said OxyChem’s PVC plants along the Gulf coast in Deer Park and Pasadena, Texas, were able to quickly restart production after Hurricane Ike.

However, feedstock ethylene supplies have been slower to recover, and have choked off OxyChem’s vinyl production, a source close to the company said.

Kline said that lack of raw material also caused a slowdown in production at plants not directly affected by Hurricane Ike.

“In Ingleside, we’re working on getting the plant back to full operations but we can’t resume because of lack of ethylene,” Kline said. “Our Louisiana plants are also operational but we can’t operate at full speed because the lack of raw material.”

 The FM was also expected to hinder VCM supply to PVC producers in Mexico, participants said.

US PVC producers include OxyChem, Westlake, Georgia Gulf, Shintech and Formosa Plastics.

($1 = €0.68)

Additional reporting by Leela Landress

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By: Greg Holt
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