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Texas PET complex startup likely early 2020: Indorama

Houston — An unfinished polyethylene terephthalate plant in Texas likely will start up in late 2019 or early 2020, according to executives with co-owner Indorama Ventures.

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The company also expects to continue commissioning its revamped 440,000 mt/year cracker in Louisiana, with full production expected in 2019 - likely delaying the expected third-quarter startup to later in the year. Executives did not elaborate on the cracker startup delay during the company's quarterly earnings presentation on Monday.

Thailand-based Indorama Ventures, the world's largest PET producer, earlier this year joined forces with Mexico's Alpek and Taiwan's Far Eastern New Century to buy bankrupt M&G Chemicals' Corpus Christi complex for $1.25 billion in cash and capital contributions.

The US Federal Trade Commission has yet to approve the deal, Indorama executives said Monday. The 1.1 million mt/year PET plant, the world's largest, and an associated 1.3 million mt/year purified terephthalic acid facility were 85% complete in October when M&G sought bankruptcy protection for its US assets and some others worldwide.

Dilip Kumar Agarwal, CEO of Indorama's feedstock and PET business, said that the FTC was evaluating documentation of the companies' US operations as well as the joint venture, and it hopes to see a response soon.

However, even if the FTC approves the deal this year, Agarwal does not expect the Corpus Christi PET plant to start up before late 2019 or early 2020. The PTA plant startup "will actually be a year beyond that," he said.

Indorama bought the Louisiana cracker in 2015 for $175 million. It had been idle since February 2001, when previous owner Equistar Chemicals shut it down for economic reasons. When it ramps up, Indorama aims to use most output as feedstock for its ethylene oxide and ethylene glycol production, the company has said.

The Corpus Christi PET complex is not the only asset Indorama has gained from M&G's bankruptcy. In March the company signed a deal to buy M&G's Brazilian assets, including a 550,000 mt/year PET plant in Ipojuca, for an undisclosed amount, giving the company an footprint in South American PET markets. Neither the Brazilian assets or M&G's 590,000 mt/year PET plant in Altamira, Mexico, are part of M&G's bankruptcy case.

The US is a net importer of PET, and those imports rose 71% from 2013 to 2017, according to US International Trade Commission data. M&G sought to feed that demand with the ambitious Texas project and in 2013 signed a $1 billion contract with Sinopec Engineering Group in 2013 to build it.

However, delays and cost overruns at the Texas project drained M&G's finances from the Americas and to its parent, Italian chemical group Mossi Ghisolfi, according to court filings. The parent group sought bankruptcy protection in Italy in October, and Luxembourg, Belgium-based M&G Chemicals, which oversees subsidiaries in the Americas, did the same in US bankruptcy court in Delaware soon thereafter. M&G has since worked to sell off its US assets.

Indorama, M&G's largest unsecured creditor with a claim of $56.6 million, had bid $10 million for M&G's 360,000 mt/year PET plant in West Virginia and a research and development center in Ohio, but in February Far Eastern won bankruptcy court approval to buy those assets for $33.5 million, marking the company's entrance into the US market. PET market sources expect the West Virginia plant to restart sometime in the third quarter this year.

--Kristen Hays, kristen.hays@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com