Eastman’s US coal-gas unit back at normal ops – CEO

HOUSTON (ICIS)–Eastman Chemical’s coal gasification facility at its production hub in Kingsport, Tennessee, is back at normal operations following an explosion on 4 October,  CEO Mark Costa said in an update during the company’s fourth-quarter earnings call on Friday.

The outage disrupted manufacturing operations at Kingsport and impacted the acetic acid market.

Repairs were mechanically complete in late December, and last week, the facility resumed normal operations.

Costa said that Eastman implemented alternate processes to maintain operations of downstream derivatives facilities, and in the end “there was zero impact to our derivates customers”.

During the outage, Eastman sourced acetic acid from the market, bringing in “a phenomenal amount of acetic acid” into Kingsport in what was “an impressive display of supply chain management”, he added.

Net costs of the disruption, repairs and reconstruction of the coal gasification facility, and restart of operations reduced fourth-quarter 2017 pretax earnings by $112m.

In addition, lost sales revenue attributed to the coal gasification disruption were about $40m, primarily in Eastman’s chemical intermediates segment.

But despite the incident, Eastman’s fourth-quarter chemical intermediates segment sales revenue rose to $659m, from $643m in the 2016 fourth quarter, due to higher selling prices attributed to higher raw material prices and continued improved market conditions, the company said.

The segment’s full-year sales were $2.73bn, up from $2.53bn in 2016.

The segment’s main products include acetic acid and derivatives, oxo alcohols and derivatives, plasticizers, and functional amines, among others.

The cash impact of the Kingsport incident in fourth quarter 2017 was minimal, with working capital benefits and insurance reimbursement largely offsetting cash expenditures for disruption and repairs, the company said.