First phase of Shintech's PVC expansion to be completed in mid-2021: Shin-Etsu

The first phase of US polyvinyl chloride producer Shintech's PVC expansion in Louisiana remains on track to finish construction in mid-2021, Japanese parent Shin-Etsu said April 28.

The first phase "should be completed by the middle of this year," Shin-Etsu said in its quarterly earnings release.

The project had originally been slated for completion by the end of 2020, with startup in Q1 2021. However, work slowed earlier in 2020 to ensure COVID-19 safety protocols, which delayed its completion to mid-2021. Startup was expected to commence in Q3 2021, but could stretch into Q4, market sources said.

The company did not respond to a request for comment.

Shin-Etsu is the world's largest producer of the construction staple used to make pipes, vinyl siding, window frames and other products. Shintech is the largest PVC producer in the US.

The $1.49 billion first phase involves an expansion across the entire PVC production chain at Shintech's Plaquemine, Louisiana, complex. PVC capacity will be expanded by 58% from 635,029 mt/year to more than 1 million mt/year.

Phase one allows expansion across PVC production chain

Permits for the first expansion phase also allow for upstream capacity additions to feed increased PVC output.

That includes a new vinyl chloride monomer unit – the direct precursor to PVC – with up to 1 million mt/year of capacity, as well as another 680,388 mt/year ethylene dichloride unit.

Also included is new chlor-alkali capacity of up to 635,029 mt/year of chlorine and 725,747 mt/year of caustic soda. Chlorine is the first link in the PVC production chain, while caustic soda, a key feedstock for alumina and pulp and paper industries, is a byproduct of chlorine production.

On Jan. 26 Shin-Etsu announced plans to build an additional $1.25 billion PVC unit at Plaquemine in the second phase of the expansion, which is under construction and targeted for completion in 2023. That facility will push the complex's PVC capacity to 1.38 million mt/year, according to Shin-Etsu's plans.

Shintech is not the only US PVC producer to increase capacity, but its project is the largest and most comprehensive across the production chain.

Westlake Chemical expanded PVC output at plants in Louisiana and Germany in early 2020, adding 340,195 mt/year of capacity, with the bulk of that new capacity pushing the company's 272,155 mt/year Geismar, Louisiana, unit to more than 500,000 mt/year, according to sources familiar with company operations. Westlake did not publicly break down new capacity added at the Geismar plant and its Burghausen, Germany, facility.

Formosa Plastics USA also has a PVC expansion project underway at its 513,000 mt/year unit in Baton Rouge, Louisiana, which will add another 130,077 mt/year in output that is slated to come online by the end of 2021.

"Growth in PVC demand is expected to continue in global markets due to rising demand for homebuilding and infrastructures," Shin-Etsu said in its April 28 release.

The company noted that US PVC supply has been tight since the second half of 2020 after two hurricanes hit Louisiana in August and October. That tightness was exacerbated when subfreezing temperatures hit the US Gulf Coast and much of the US in mid-February, forcing widespread petrochemical shutdowns that included at least 57% of US PVC capacity.

Subsequent turnarounds in March and April, as well as upcoming planned work in May through mid-June, have kept supply tight amid strong demand.

"The supply shortage is expected to continue for a while," Shin-Etsu said.

The company also noted that it would temporarily shelve business performance forecasts given signs of an inflation upswing that has disrupted supply chains and resurgences of COVID-19 infections despite the progression of vaccines.