Sao Paulo — Braskem America's new Delta polypropylene plant in La Porte, Texas, expects to reach its 450,000 mt/year nameplate capacity by the end of the year, North America CEO Mark Nikolich said Sept. 24.
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"By year-end, we will be running at a 450,000 mt benchmark rate," Nikolich said during a virtual press conference. "And we've already demonstrated the plant can run at that rate. We haven't demonstrated that plant can run that rate for multiple months in a row, obviously, because it's too new towards a startup, but we've already demonstrated that level of production rate."
Braskem announced the start of Delta's commercial production on Sept. 10. The project took 3.5 years to be completed and cost $750 million. It s able to produce homopolymer, impact copolymer and random copolymers.
As the Delta plant is new, it could face some challenges that delay reaching its nameplate capacity rate, such as temporary shutdowns, Nikolich said.
"Our expectation is that this ramps up through the remainder of this year," he said. "I will tell you that we've been producing commercial quantities for the last two weeks, and I think the commissioning and startup is going extremely well."
In terms of sales destination, Braskem aims to allocate half of the new volume to North America, including Mexico, Nikolich said.
"This will be dependent on client needs, strategic client needs and how netbacks are spreads globally, because we're going to continue to optimize what we -- where we supply and how we supply and what we supply," Nikolich said.
For now Brazil is still able to supply Braskem's clients globally, while the Delta plant would be focused on the US market, Nikolich said. The company expects to supply strategic clients in the US for the next four to six months, he said, due to the tightness of PP in the domestic market.
"Demand has far outstripped supply," he said. "Right now, our big focus is on solving the demand needs in North America because of the tightness in supply and then starting to spread out into supplying our affiliates in other parts of the world."
Braskem US operations previously imported PP from its franchises in Brazil and Europe, while now the goal is to reverse that flow, Nikolich said.
"We're the major supplier in Brazil," he said. "So at this point in time, Brazil needs every fund they can keep of PP to supply the domestic and, the local market Mercosul."
Regarding its Charleston, South Carolina, export hub, Nikolich said it allows the company to increase its market share in Europe without increasing capacity and allows it to optimize South America through-freight, adding it's less expensive to supply to the West Coast of South America than to Brazil in many instances.
In terms of feedstock consumption, Braskem said as the largest propylene buyer in North America it buys from a variety of sources: PDHs, refineries, steam crackers and metathesis units.
"That gives us a basket of indicators that mitigate volatility risk, mitigate one piece of the propylene supply market getting out of whack with another," Nikolich said, adding that Braskem entered the market in a period of time where there was excess propylene to secure the anchor contracts for the Delta plant. "Those contracts are the most competitive contracts of their kind in the US Gulf Coast," he said.
Nikolich said the Delta plant was designed to be extremely cost competitive – not designed to make a lot of specialty materials, but instead focusing on cost effectiveness. However, he said he expects at least four new plants to compete in the PP North American market with Braskem in the future.
"We're predicting clearly some capacity coming on that will drive those margins down," he said. "Our expectation is that when capacity comes on, there'll be a dip in spreads, but then spreads will come back up and will move back up to the previous levels that support that reinvestment."