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Westlake to explore increasing ethylene capacity: CEO

Houston — Westlake Chemical will explore increasing its ethylene capacity via newbuilds, expansions, and acquisitions in addition to planned expansions of polyvinyl chloride and chlor-alkali capacity in Louisiana and Germany, CEO Albert Chao said Tuesday.

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"We would like to be integrated, historically, either organically by building plans or expansions, or inorganic through acquisitions," Chao said during the company's quarterly earnings call. "We'll explore both ways of increasing our ethylene production to be more fully integrated."

Part of that integration involves reducing the company's reliance on merchant ethylene to feed its derivative plants.

Part of its $2.4 billion acquisition of Axiall in 2016 included Axiall's 10% interest in a 1-million mt/year joint venture steam cracker with South Korea's Lotte Chemical that is under construction in Lake Charles, Louisiana.

Once the plant is completed, Westlake has up to three years to increase its ownership up to 50%.

"We have the ability to notify Lotte of any interest we choose up to three years post startup period," CFO Steven Mark Bender said during the call.

Westlake on Monday announced plans to expand PVC and vinyl chloride monomer capacity at plants in Geismar, Louisiana, and Burghausen and Gendorf in Germany.

The expansions, which executives called debottlenecking projects during Tuesday's call, would add 340,195 mt/year of PVC and 90,178 mt/year of VCM production to the three plants combined.

In addition, Westlake will add 24,947 mt/year of chlorine and 27,215 mt/year of membrane-grade caustic soda production to the Gendorf plant's chlor-alkali output.

Bender declined to specify how much PVC and VCM capacity would be added at each plant. The Geismar and Burghausen expansions will be operational in 2019, followed by the Gendorf projects in 2020 and 2021.

Chao also said he believed domestic PVC price increases announced by Westlake and other producers for February and March would be "well-supported." Producers announced 3 cents/lb increases for February and 4 cents/lb hikes for March.

"Inventory positions, both at producer and customer levels, are on the low side," he said. "And as you know, this is the start of the spring season for construction, so we think that this price increase will be well-supported."

Market sources say the February increase has largely been accepted, but there could be pushback for the March amount.

"Some manufacturers believe the final increase might be around 2 to 3 cents/lb for March," a market source said.

--Kristen Hays,
--Edited by Kevin Saville,