BP to handle US acetic acid sales for Eastman

23 July 2018 19:08 Source:ICIS News

HOUSTON (ICIS)--BP will take over sales and marketing of US acetic acid made by Eastman Chemical at its Tennessee headquarters plant beginning 1 August.

In a statement issued Monday, Eastman said that it “has decided to sell certain grades of acetic acid produced at its Kingsport, Tennessee site through a single outlet capable of reliably and efficiently delivering this product to market.

“Eastman has determined that BP has the capabilities required to reliably and efficiently deliver Eastman-produced non-specialty acetic acid to the market,” the statement said. “This is a strategic business decision, and terms of the contract are not being disclosed at this time.”

Eastman only has two US acetic acid plants, a 255,000 tonne/year unit at corporate headquarters in Kingsport, Tennessee, and a 600,000 tonne/year plant at Texas City, Texas.

BP and Eastman already have a sales agreement covering the Texas unit. BP sells acetic acid produced there and has an agreement to buy all of the material made at the plant through December 2031.

In late April, BP declared force majeure at the 255,000 tonne/year plant which kicked off a chain reaction in the global acetyls market.

In mid-May, a few weeks after BP’s move, Dow Chemical declared a global force majeure  on vinyl acetate monomer (VAM) because BP is its main supplier of acetic acid, a major feedstock. The force majeures shut down BP’s acetic acid unit and Dow’s VAM plant in Texas City.

But sources said earlier this month that both plants in Texas City, the VAM and acetic acid units, have restarted although at limited capacity.

Eastman’s acetic acid unit at the company’s headquarters in Kingsport also went down in October last year because of an explosion that disrupted operations at the chemicals production hub and sent producers and buyers on a global scramble to find more of the material and other derivatives.

The company said the accident stemmed from a process start-up upset as an equipment swap was being done in its coal gasification operations.

Eastman earnings took a hit because of the explosion, which required that Eastman had to buy acetic acid from the acetyls market because of the outage. The company’s Q4 pretax earnings were reduced by $112m because of the incident, the company reported.

In late January, Eastman restarted the Tennessee coal-gasification unit.

That explosion and a series of US force majeures this year have boosted US acetic acid export prices, now up 54% since last October.

By Lane Kelley