Shintech eyes Louisiana plant start Apr-May

04 March 2008 22:04 Source:ICIS News

HOUSTON (ICIS news)--US polyvinyl chloride (PVC) producer Shintech will not finish up the first phase of the company’s new $1.9bn (€1.3bn) complex in Louisiana until sometime in April or May, a source close to the company said on Tuesday.

The PVC, vinyl chloride monomer (VCM) and chlor-alkali production facility in Iberville Parish, south of Plaquemine, was widely expected to begin operation in mid-March, but work on the plant has taken longer than expected and the company has opted not to pay overtime for workers in order to keep the plant’s cost within budget, the source said.

“[Shintech] did not want to incur any additional cost under the escalated labour and construction materials markets by rushing the construction process,” the source said.

Shintech had previously estimated that the complex would begin production sometime in late 2007 or early 2008. Even earlier, in 2005, the company delayed the plant’s estimated start-up to 2007 from 2006 due to the impact of Hurricane Katrina on local markets for construction workers and materials.

The facility would allow Shintech to begin producing some of its own raw materials for PVC production. This includes the PVC feedstocks chlorine and VCM as well as chlorine’s increasingly valuable co-product, caustic soda.

However, the complex could also have a significant impact on the US caustic soda and PVC markets.

Buyers in the US caustic soda market are depending on the plant’s estimated phase-one production capacity of 300,000 tonnes/year to replace a production loss of 230,000 tonnes/year when Occidental Chemical (OxyChem) converted its chlor-alkali plant in Taft, Louisiana, to potassium hydroxide production in February.

Other factors have since contributed to a supply crisis in the US caustic soda market and pushed prices sharply upward. Buyers said any new chlor-alkali production capacity would add much-needed balance to the market’s supply/demand dynamics.

On the contrary, PVC producers said they welcomed the plant’s extended delay, as the complex would initially add 300,000 tonnes of production capacity to an already oversupplied US PVC market.

However, producers said the added capacity will be needed once the US housing market recovers and demand for vinyl construction materials is reignited.

After two additional phases of construction, the facility’s PVC production capacity will reach 716,000 tonnes/year by 2010.

Japan’s Shin-Etsu is the parent company of Shintech.

($1= €0.66)

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By Greg Holt