US Westlake expects chlor-alkali expansion to be at full capacity by Q2

20 February 2014 18:14 Source:ICIS News

HOUSTON (ICIS)--Westlake Chemical's additional chlor-alkali capacity in Geismar, Louisiana will be operating at full commercial production rates by the end of the first quarter, company executives said on Thursday.

The plant, which will add about 100,000 electrochemical units (ECUs) to the company’s existing 250,000 ECU/year facility near Baton Rouge, began its start-up in December, and market participants have been watching for additional caustic soda, chlorine and chlorine derivatives on the merchant market for signs of the plant’s production levels.

During a Q4 earnings conference call, company officials said that the new capacity is running at a sufficient rate so that Westlake no longer buys chlorine on the merchant market to feed its chlor-vinyls operations to produce polyvinyl chloride (PVC), but acknowledged that the plant is running at less than maximum capacity.

In response to an analyst's question about the “ease or difficulty” of starting up a new chlor-alkali facility, Westlake chief financial officer Steven Bender said that the start-up phase was occurring at a fortuitous moment in the market, even though he sidestepped the original question.   

“As you know, thinking about starting up a new plant, it takes time,” Bender said. “Fortunately ... we are in a period of slackened normal seasonal demand, so we have the opportunity to ramp that up as the market dictates."

“We will be at commercial operating rates by the end of the first quarter," he added.

Company executives also sidestepped the question of whether the new plant’s capacity will bring oversupply to the caustic soda market.

“There was a move to increase prices by $40-50 a ton in the first quarter, and the industry has yet to be able to implement that price increase,” Westlake president and CEO Albert Chao said.

The announced PVC price increase of 3 cents/lb for January had gained traction in the market, Chao said, adding that he expected another 3 cents/lb increase, or a significant portion, to take in February. However, he said it is too early to tell whether the 3 cents/lb increase that most producers have announced for March will be implemented.

By Bill Bowen