Indorama expects lengthy repairs to lightning-damaged Louisiana cracker

Indorama Ventures expects repairs to its 440,000 mt/year Louisiana cracker could take several months, the company said Aug. 13 in its second-quarter 2020 earnings release.

"Unfortunately we recently had a lightning strike in recently started Lake Charles, which might take a few months to recover," the company said. "Damage assessment is being done" and is covered by insurance, including profit losses.

Indorama said it does not anticipate any impact on downstream production as spot ethylene "is covered to ensure uninterrupted feedstock supply."

Lightning struck the cracker Aug. 2, prompting its shutdown. Indorama initially started up the revamped cracker in May 2019, but shut it down several months later for repairs and technical improvements after repeated flaring. The company restarted it in December, and it reached commercial production in February.

Pandemic shutdowns cut Q2 earnings by 93% on year

The world's largest polyethylene terephthalate producer also reported a a net profit of Baht 154 million ($4.9 million) for the quarter, a 93% decline from Baht 2.267 billion ($72.78 million) in the year-ago period.

Indorama saw strong demand in the quarter for PET resin used to make plastic bottles as well as hygiene fibers, such as those used to make diapers. However, the company's oxides and derivatives segment was hurt by low oil prices squeezing margins for ethylene glycol, a precursor to PET, and gasoline octane booster methyl tert-butyl ether (MTBE).

In addition, fibers used in non-hygiene industries, such as apparel and automotive, also were "severely impacted" because of widespread coronavirus outbreak-related shutdowns, less spending on durable goods and travel restrictions.

"Our portfolio serving end markets of food, beverages, personal care and hygiene were positively influenced during the pandemic," the company said. "We are also pleasantly surprised that our material which goes into electronics and screens was steady. The automotive- and oil-related segments saw severe drops in offtake and for the first time we saw the shutdown of the retail segment, which impacted our apparel demand."

Indorama also said that as shutdowns eased and crude prices rose later in the quarter and into the third quarter, "we expect to see improved performance of the laggards" in Q2.

Indorama owns a third of a major PET and upstream purified terephthalic acid (PTA) complex under construction near Corpus Christi, Texas. In March, Indorama and its partners, Mexico's Alpek and Taiwan's Far Eastern New Century, suspended spending on the project through the rest of 2020 because labor costs on the US Gulf Coast had exceeded previous budget estimates.

The three partners collectively bought the project out of M&G Chemicals' bankruptcy for $1.25 billion in cash and capital contributions in 2018. M&G had stopped work on the complex in October 2017, and the new owners did not resume that work until early 2019, after receiving approval for the acquisition from the US Federal Trade Commission in late 2018.

The 1.1 million mt/year PET plant was originally slated to come online in mid to late 2020, followed by the 1.3 million mt/year PTA plant a year later. In November 2019, the companies decided to delay those startups by a year, and in March pushed that delay back further to 2023.

The units will be the world's largest PET facilities when they come online.

Indorama on Aug. 12 also noted that the company remains committed to increasing its recycled PET capacity of 750,000 mt/year by 2025 to meet customer demand. The company announced Aug. 4 it had agreed to buy IMP Polowat, a PET recycling facility in Poland, with capacity to produce 23,000 mt/year of PET flakes and 4,000 mt/year of recycled PET pellets. The deal, for which terms were not disclosed, is slated to close in the third quarter.