Petrologistics to start up US propane dehydrogenation plant in July

08 March 2010 22:50  [Source: ICIS news]

HOUSTON (ICIS news)--Petrologistics plans to start up its propane dehydrogenation (PDH) plant in Texas during the last week of July, increasing US propylene capacity by 1.2bn lb/year (544,000 tonnes/year), a company executive said on Monday.

The unit, which Petrologistics bought from ExxonMobil in March 2008 and is converting into an on-purpose propylene plant, will be the largest PDH facility in the world, according to the company.

The plant will produce chemical (CGP) and polymer-grade propylene (PGP) from propane, and its start-up will come at a time of significant uptrend in the US, assuming market conditions remain the same in the coming months.

US propylene spot prices have risen by nearly 50% in the last four months, lifted by tight supply and firm demand for the monomer.

Spot PGP for March traded on Friday at 73.00 cents/lb ($1,609/tonne, €1,175/tonne), which is up from deals done at 49.00 cents/lb in mid-November, according to global chemical market intelligence service ICIS pricing.

Petrologistics said it expected the US propylene market to remain firm.

“We see healthy margins in propane and propylene for years to come,” said senior vice president Hank Jeans, citing research done by the company.

Market sources had mixed views on the impact the rise in capacity would have on the market.

One source said the start-up of Petrologistics’ new plant would likely help take some pressure off supply, but a plastics trader said the additional output would not even come close to making a difference.

US propylene production in 2009 totalled 29.3bn lb, down by 10% from 32.6bn lb the previous year, according to data from the National Petrochemical & Refiners Association (NPRA).

Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical are among the major US producers of PGP and CGP.

Dow Chemical, INEOS, Ascend Performance Materials and Total are among the main buyers.

Additional reporting by David Barry

($1 = €0.73)

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By: William Lemos
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