Celanese victorious over methanol supplier SCC in Texas case

10 August 2012 22:20  [Source: ICIS news]

A methanol tankHOUSTON (ICIS)--US Celanese won a lawsuit on Friday that it claims will allow the acetyls producer to source methanol from supplier Southern Chemical Corp (SCC) according to the terms of a previously established contract.

Trial attorneys could not be reached immediately following the verdict, but Celanese issued a statement saying the Houston jury had ruled in its favour regarding the terms of its methanol supply contract with SCC.

“We are pleased with the jury’s verdict and expect Southern to continue to supply methanol under the terms of our contract,” said Gjon N. Nivica, Jr., Celanese senior vice president, general counsel and corporate secretary.

When the contract expires in three years, Celanese plans to have its own methanol plant up and running at an acetyls complex in Clear Lake, Texas.

Celanese did not return calls seeking comment.

SCC filed suit in 2007, two years into the 10-year contract, alleging that Celanese re-sold methanol supplied under the deal, which was prohibited by the agreement.

SCC attorney Jeff Chambers said in the trial that the contract price was 52 cents/gal and that Celanese re-sold methanol it received at big profits, ranging from $1.06-1.89/gal, which was not permitted under the contract.

US spot barge methanol prices on Friday ran 107.50-108.50 cents/gal, according to market sources.

SCC wanted to end the deal and receive compensatory damages of $1.3bn, plus attorneys fees and punitive damages.

Celanese denied that it violated the contract.

Methanol is a crucial feedstock for acetic acid, which is Celanese’s flagship product. Celanese is by far the largest customer of SCC, the US marketing arm of Methanol Holdings (Trinidad) Limited (MHTL).

Celanese proposed at one point in 2009 that it might even buy stock in the Trinidad producer to gain more security over its methanol needs.

But John O’Dwyer, the Celanese executive who negotiated the contract with SCC, testified in early August that no shares were available.

Based on information gleaned from the trial, New York stock analyst David Begleiter with DeutscheBank said in July that Celanese stood to gain as much as $213m (€173m) this year from its contract with SCC.

Begleiter said Celanese’s cost to make methanol at its proposed plant in Clear Lake would be 55 cents/gal, “or only 3 cents/gal more than Celanese’s current SCC methanol cost”.

($1 = €0.81)

By: Lane Kelley
+1 713 525 2653

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly