Formosa to forego US PVC exports on VCM outage

26 July 2017 21:01 Source:ICIS Chemical Business

Formosa Plastics USA will not offer export volumes of polyvinyl chloride (PVC) for August, following a technical problem with its vinyl chloride monomer (VCM) production at its Point Comfort facility in Texas, market players said on 21 July.

The tightening of export allocations is expected to stabilise PVC spot export prices, which have slumped over recent months on lower-than-expected export demand and declining feedstock costs in global markets. US spot export prices are down by an average of $80/tonne since their early March peak.

Formosa’s Point Comfort complex experienced a power outage on 24 June during intense thunderstorms. The company has been restarting production at the complex, which has vertically integrated output of PVC and polyolefins from the on-site ethane cracker and chlor-alkali plant.

Formosa declared force majeure on its polyethylene (PE) and polypropylene (PP) production for the month of July, and its vinyls operations were heard to be running at reduced rates. Formosa typically exports about 30,000-40,000 tonnes/month of PVC out of the average 230,000-240,000 tonnes/month of total US exports. The company has told its customers that the problem should be corrected by early August.



US producers are preparing to announce their August prices for export business, and most market participants expect an increase. A benchmark price for Asia business was announced last week at a $20/tonne increase, and it was accepted by buyers in India, China and Southeast Asia. US exports have declined by about 7% during the first five months of the year, according to the US International Trade Commission.

That has been attributed to greater domestic demand which has consumed an additional 90,000 tonnes during the first six months of 2017, according to the American Chemistry Council (ACC), using data compiled by Vault Consulting.

Formosa’s Point Comfort complex has production capacity of 1.5m tonne/year of ethylene; 560,000 tonne/year of vinyl chloride, 270,000 tonne/year 
of propylene; 650,000 tonne/year for (HDPE) high-density polyethylene; 300,000 tonne/year for monotheylene glycol (MEG); 910,000 tonnes/year of chlorine and 1m tonne/year of caustic soda, among other, according to the ICIS plants and projects database.

By Bill Bowen