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Westlake Chemical considering PVC, ethylene expansions: CEO

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Westlake Chemical considering PVC, ethylene expansions: CEO

Highlights

Strong PVC, PE demand expected to stretch through 2021

No specific expansion projects yet announced

Westlake Chemical is scoping expansion opportunities to meet growing demand for construction staple polyvinyl chloride and possibly increasing its internal ethylene production, CEO Albert Chao said May 4.

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He said during the company's Q1 2021 earnings call that Westlake is a major US ethylene buyer, more than 1 billion lb (453,592 mt) per year, to feed downstream derivatives that the company's internal ethylene production cannot cover.

"Integration in that area would be helpful," Chao said.

The company also may add downstream PVC capacity, given strong demand for pipes, window frames, vinyl siding and other products for housing, he said.

"We are finally above the 50-year average for new home construction in the US for the first few months of this year," Chao said. "We expect that trend to continue, and building products demand will increase," so Westlake is looking expanding PVC production.

He noted that Westlake has not announced any large capacity expansions, "but small increases to meet the needs, growing needs of our customers."

Westlake announced the company's Q1 2021 net income reached $242 million, up 67% from $145 million in the year-ago period.

Other US PVC expansions underway

Westlake added 340,195 mt/year in additional PVC capacity in 2020 at plants in Geismar, Louisiana, and Burghausen, Germany. The company did not specify how much of that total was added at each plant, but sources familiar with company operations said the bulk was added at the Geismar facility.

Two more PVC expansions are expected to come online in 2021, barring delays. Shintech, the US arm of Japan's Shin-Etsu, expects to start up the first phase of an expansion across the PVC chain at its Plaquemine, Louisiana, after finishing construction by mid-year 2021, including a 58% increase in PVC production to more than 1 million mt/year. Shintech is the largest US PVC producer.

Formosa Plastics USA also has a debottlenecking PVC project planned at its 615,000 mt/year Baton Rouge, Louisiana, PVC facility that is slated to add more than 130,000 mt/year of capacity, according to permitting documents. The company aims to bring that expansion online in Q4 2021.

Chao attributed Westlake's results to higher prices and margins for both PVC and polyethylene amid tight supply, low inventories and robust demand in the aftermath of a deep freeze that forced widespread petrochemical outages along the Us Gulf Coast and much of the US in mid-February.

Westlake and other producers were still working to clear order backlogs of resins and restock inventories and supply chains amid strengthening demand.

"As we look ahead, we see continuing strength in global demand in polyethylene, PVC and downstream building products driven by the solid market in residential construction, packaging, automotive and health care," Chao said.