Eastman to bring down US Integrex PET plant in Q4 for upgrades

23 October 2009 15:29  [Source: ICIS news]

TORONTO (ICIS news)--Eastman Chemical plans to bring down its Integrex polyethylene terephthalate (PET) plant South Carolina in the current fourth quarter to make additional improvements and resolve operational problems, chief executive Jim Rogers said on Friday.

Problems with the plant were one factor hurting operational results in the third quarter in Eastman’s performance polymers business, Rogers said in a conference call.

“While we have made progress identifying and resolving operational issues with our Integrex asset we have more work to do,” he said.

“As a result, we will have a shut down in the fourth quarter to make additional improvements that we expect will get this asset operating like we know it can.”

Rogers did not comment on the plant’s current capacity.

According to Eastman’s 2008 annual report, the facility’s capacity is 525,000 tonnes/year, following debottlenecking from its initial capacity of 350,000 tonnes/year at start up in 2007.

Rogers said that Eastman’s fourth-quarter performance polymer results would be affected by the Integrex shutdown, as well as by volatile paraxylene (PX) feedstock costs.

PX costs dropped by some 20% in October from September, prompting Eastman’s domestic customers to destock PET in anticipation of lower prices, he said.

Also, Eastman still has some higher-cost PX working through its system, causing margin pressure, he added.

Overall, Eastman expects fourth-quarter earnings per share to decline sequentially from $1.38 in the third quarter, but to be above the high end of analysts’ estimates of 85 cents, Rogers said.

Eastman would benefit from a favourable product mix and cost reduction measures. 

But it was also facing volatile raw material and energy costs and a decline in sales volumes due to normal seasonality, he said.

“On raw material costs, propane is already up 10% in the month of October, and, as mentioned, paraxylene is down 20% in October, compared to September. Both of these, believe it or not, can pressure margins,” Rogers added.

The US producer reported third quarter net earnings of $101m (€68m), nearly unchanged from $100m reported from the same time last year.

The slight increase came despite a 28% drop in sales revenue to $1.3bn and a 4% decline in sales volume compared with third-quarter 2008.

($1 = €0.67)

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By: Stefan Baumgarten
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