Ascend Performance Materials will focus on growing its nylon (polyamide) 6,6 and chemicals businesses organically through investments rather than mergers and acquisitions, its new CEO said on 3 April.
“Ascend is in a very good position given that we are a fully integrated producer of nylon 6,6. This is our business, this is what we do – it’s not part of something else,” said president and CEO Phil McDivitt, in an interview with ICIS.
McDivitt had been president and chief operating officer at Ascend, and assumed the CEO title on 3 April. He replaces Fred Poses, who retired as CEO and will step down from the board of directors.
“In the last couple of years we established Ascend as a leader in the industry to provide value-added technologies and solutions to allow our customers to differentiate and be successful. We want to stay fairly close to our core and not count on acquisitions to achieve success,” he added.
McDivitt also points to Ascend’s track record of being able to supply customers consistently in a nylon and intermediates industry that has recently experienced force majeures.
Ascend will focus its capital investments on nylon 6,6 and chemicals, including nylon intermediates acrylonitrile (ACN), adiponitrile (ADN), hexamethylene diamine (HMD) and adipic acid, as well as specialties such as oilfield chemicals.
“Ascend has a large nylon 6,6 business and a large chemicals business. We have the capability to grow both and that’s where we’ll make our capital investments,” said McDivitt.
Ascend’s Chocolate Bayou, Texas, site produces ACN, which it mostly consumes internally. The ACN is used to produce ADN at its Decatur, Alabama, complex in a proprietary process described as its “crown jewel”.
This is then used to make HMD at the site. Ascend processes HMD with adipic acid at its Pensacola, Florida, site to produce nylon 6,6.
“We will continue to expand ADN to support growth. Our [ADN technology] is more modular – we can add smaller increments of capacity as needed instead of building a big single facility,” said McDivitt. This also results in less supply disruption risk than in a large facility, he added.
The company is also a merchant supplier of all these nylon intermediates.
“One of the things we like is our North American footprint. We think there’s an inherent and sustainable advantage in being a North American producer based on propylene and natural gas – things we purchase,” said McDivitt.
“We can cost effectively service any part of the world from North America. Nylon 6,6 ships very well. Sending it to Asia is as cost effective as sending it to Michigan. We plan investments inside our existing footprint,” he added.
NYLON 6,6 IN AUTOMOTIVE
McDivitt sees global demand nylon 6,6 growing steadily at around 3%/year, driven in part by the need for higher temperature resistant polymers in the automotive sector.
“The temperature under the hood [of vehicles] is going up. Measures to increase miles per gallon (MPG) really drive different actions under the hood as companies look for more efficient consumption of fuel via turbocharging,” said McDivitt.
Ascend’s nylon 6,6 products are used in engine covers, cylinder head covers and air intake manifolds among other auto applications.
Nylon 6 will continue to get displaced by nylon 6,6 in these high temperature resistant applications, he noted.
“Nylon 6,6 applications will continue to grow in automotive regardless [of the automotive cycle] because of technological changes in new vehicles,” said McDivitt.
Despite concerns in the broader market about US auto sales peaking (peak auto), the CEO sees no significant changes in auto demand.
“The auto market has largely recovered from the crisis levels of 2008-2009 so growth should follow a more historically normal pattern of growth. There will be ups and downs but I don’t see any underlying negative changes,” said McDivitt.
PDH PROJECT NOT LIKELY
Ascend is a major buyer of propylene – around 500,000 tonnes/year according to a company source in 2016 – to produce ACN, but is not likely to revive its propane dehydrogenation (PDH) project.
The company shelved its planned 1m tonne/year PDH project in Chocolate Bayou in February 2016 as the propylene/propane spread declined substantially.
The project had been slated to start up in mid-2019.
“Some PDH projects will be built and should allow propylene to stay in a relatively tight range going forward. However, our capital may not be best used in propylene integration. Instead we will make investments in other parts of the nylon 6,6 chain,” said McDivitt. ■