OUTLOOK ’19: US VAM adds first new capacity in decades

HOUSTON (ICIS)–The US vinyl acetate monomer (VAM) market will begin the year with the first new capacity in that market in this century.

In December, US-based acetyls producer Celanese finished an expansion at its Clear Lake, Texas VAM plant that added 150,000 tonnes of new capacity, giving that plant 450,000 tonnes/year capacity and making it the largest in the US.

That unit and the other four US VAM plants are all in or near the Houston-Galveston metropolitan area.

Celanese’s VAM expansion pushed its Clear Lake plant ahead of what once was the largest US VAM plant, LyondellBasell’s 385,000 tonne/year unit in La Porte, Texas.

US VAM is a classic mature market, supplying a necessary ingredient for the paints and coatings industry but in a sector with GDP growth that rarely attracts new investment.

A distributor said the Celanese expansion may be noticeable in the US market but it will be just a blip globally. The expansion will boost VAM global supply by just barely GDP growth (not quite 2.2%). Meanwhile, the global market remains tight on VAM capacity, the distributor said.

Celanese chief executive Mark Rohr agreed, saying that acetyls industry capacity should be adequate in the next couple of years because of the VAM addition and also from a similar expansion the producer announced on its acetic acid plant in Clear Lake.

Celanese plans to add 140,000 tonnes/year at its acetic acid plant there at some point in 2019-20. The 1.5m tonnes/year plant is the largest acetic acid unit in the US.

Rohr said that the global acetyls market needs the new capacity from Celanese because it has a track record of regular plant outages.

“You’ve got an industry that’s running around mid-80% capacity utilisation that has a history of losing on average three production assets per year,” Rohr said, adding that those assets are world-scale plants.

In the past two years alone there have been quite a few acetyls outages.

Eastman’s acetic acid unit in Kingsport, Tennessee, had an explosion in late 2017 that rocked the market for a few months. Then BP declared force majeure at a Texas City acetic acid plant in April 2018 that brought a chain reaction in the acetyls, forcing Dow to declare force majeure on VAM two weeks later because BP is its acetic acid supplier.

Rohr added that Hurricane Harvey in the second half of 2017 that knocked at least half of the US acetyls market off line was actually part of a fairly regular cycle in the acetyls market.

“That 100-year storm last year (in 2017) happens every three years, four years, five years,” Rohr said.

The storm that Rohr said happens every 3-5 years can be seen in the following 25-year spot VAM chart.

The VAM expansion at Clear Lake could change that market’s mood in 2019, said the distributor.

“It should be a transition year, because the US is going to shift to being long on VAM because of the Celanese expansion,” the distributor said.

Focus article by Lane Kelley

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