Corrected: Westlake says ethylene expansion gives it new options

05 August 2014 21:01 Source:ICIS News

Correction: In the ICIS story headlined “Westlake says ethylene expansion gives it new options” dated 5 August 2014, ethylene and propylene were incorrectly listed as feedstocks in the second paragraph. A corrected story follows.

HOUSTON (ICIS)--Ethylene prices will remain strong throughout the year and into 2015, Westlake Chemical president and CEO Albert Chao told stock analysts during a conference call Tuesday morning to discuss the company’s second quarter financial results.

The company during the first half of 2014 had expanded its ethylene production capacity and converted two plants – in Lake Charles, Louisiana, and Calvert City, Kentucky – to use ethane as a feedstock rather than propane. Ethane is less expensive and possesses less cost volatility than propane, Chao said.

The company also completed, less than a week ago, its purchase of German specialty polyvinyl chloride (PVC) maker Vinnolit. Vinnolit has its own chlorine production, but has to buy ethylene.

Even with expected expansion of PVC production, Chao said the company will have excess chlorine. Westlake could ship ethylene to Vinnolit facilities in Europe in the form of ethylene dichloride (EDC) to provide a lower-cost feedstock for the vinyls maker, giving it a competitive advantage in the European market.

“If we are long (on chlorine supply), then we can look at whether we can sell the chlorine in terms of EDC or ship it to our sister companies to make into PVC – VCM, whether it’s in Europe or Asia and Europe,” Chao told the analysts.

Chao said that had not been decided, but was an option that the acquisition had given the company.

A few hours earlier, Westlake reported a 16% increase in second quarter net income year-on-year to $169.4m on the back of stronger pricing for most of its olefins products, the Houston-headquartered producer said on Tuesday.

The company also saw gains from higher volumes for polyethylene (PE), styrene and caustic soda, partially offset by lower volumes for PVC resin and ethylene co-products due to maintenance of its Calvert City, Kentucky cracker, and the conversion of an ethylene plant from propane to ethane feedstock, the company said.

Sales increased 6.3% year on year during the quarter to $998.6m, the company said.
By Bill Bowen