Braskem’s decision to proceed with a new polypropylene (PP) plant in the US comes as margins for the polymer have risen sharply from the single digits earlier this decade.
The Brazilian polyolefins producer announced the decision on 22 June. It had been considering the expansion for more than a year.
Construction of the $675m project – known as “Delta” and billed as “the largest PP production line in the Americas” – is expected to begin mid-summer, with the final phase of main construction targeted for the first quarter of 2020. The new plant will have a capacity of 450,000 tonnes/year.
Delta will be built in La Porte, Texas, where it will benefit from infrastructure already in place. Braskem has existing PP capacity of 354,000 tonnes/year in La Porte.
Braskem’s project comes during a drought of new PP capacity in North America. The company noted that the region has not had a new PP plant added since 2005.In fact, it has lost capacity, with both Sunoco and Phillips Sumika shutting down plants. Those two plants represented a total of 565,000 tonnes/year of capacity.
The loss of capacity and the increase of demand helped increase PP margins.
For naphtha-based integrated production, margins rose from 5.92 cents/lb ($131/tonne) in 2012 to 25.30 cents/lb so far in 2017. Margins based on propane dehydrogenation (PDH) production have remained above 25 cents/lb throughout the time. These margins are attracting other companies to consider PP projects.
REXtax is scheduled this year to restart two lines at its site in Odessa, Texas. The two lines have a total capacity of 438m lb/year (200,000 tonnes/year).
The project by Inter Pipeline is a legacy one inherited after acquiring the Canadian natural gas liquids (NGLs) business of Williams Companies. It would be integrated with a proposed PDH unit with a propylene capacity of 525,000 tonnes/year.
Before these companies commit to PP projects, they will likely seek assurances that PP margins will remain elevated.
Additional reporting by Stefan Baumgarten