AFPM '19: US adding new acetyls capacity for first time in decades

Source: ICIS News

2019/03/23

HOUSTON (ICIS)--The US acetyls market is breaking records this year heading into this year’s International Petrochemical Conference (IPC), with one producer adding or planning to add the first new significant capacity expansions in decades.

All of the new capacity comes from Celanese, which added 150,000 tonnes of new vinyl acetate monomer (VAM) capacity in December at its Clear Lake, Texas headquarters.

Then in February, Celanese said it planned to expand its acetic acid plant there by 800,000 tonnes, at a projected cost of $425m.

No other acetyls producer has announced any new US plant capacity. In fact, other producers are pulling back from the business on supply issues.

Eastman ceded sales and marketing of most of its acetic acid to BP last year after a force majeure.

A force majeure may also have prompted DowDuPont to put its Texas VAM plant on the market in August, though the producer has not confirmed it. Market sources cited a story saying that DowDuPont had retained Wells Fargo to sell the unit.

Meanwhile, acetyls pricing has followed feedstocks in recent months, as it did last year. Most of the price moves in US acetic acid and VAM in 2018 stemmed from plunges in oil and methanol values.

US acetic acid export prices hit a 10-year high in mid-2018 on outages and a force majeure, but after that values fell on the resolution of plant issues and the steady decline in oil prices that began in mid-October.

VAM did much the same, though it also tracks ethylene, which is a feedstock. Contracts peaked for 2018 in June, following Dow Chemical’s declaration of force majeure in May stemming from another feedstock-related issue, because Dow had trouble sourcing acetic acid from supplier BP.

US February VAM contracts settled down slightly in the first week of March. It marked the fourth drop in a row for VAM contracts, which fell in November (-2 cents), December (-1 cents) and January (-.05 cents) because of lower oil and feedstock prices and the usual seasonal move by producers to clear inventory at the end of the year.

Crude has rebounded so far this year and methanol has edged up somewhat, with spot pulled higher in recent weeks by logistics issues and trader anxieties that US sanctions on Venezuela might also change to include methanol.

Top executives at Celanese recently described the company’s next acetyls project as a shift in focus to the US rather than China.

Though China has been a huge focus for the Dallas-based producer over the past decade, Celanese’s acetic acid expansion at Clear Lake would boost capacity there by 54% in the next few years. The addition would also reduce the producer’s capacity in Asia by 600,000 tonnes.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Lane Kelly