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Westlake's US, Germany PVC expansions to start up by end-2019: exec

Highlights

Company adding 340,195 mt/year in PVC debottlenecking projects

Shintech, Formosa also expanding PVC output

Houston — Westlake Chemical aims to start up polyvinyl chloride expansions at three plants in Louisiana and Germany by year-end, a company executive said Wednesday.

"In Q4, we're bringing online a bit over 750 million lb of PVC production from de-bottlenecking sites, both on the Gulf Coast in Geismar, Louisiana, as well as Europe," Jeff Holy, vice president and treasurer, said at an energy conference Wednesday.

The output expansions at Westlake's facilities in Geismar, Louisiana, and Burghausen and Gendorf in Germany will add 340,195 mt/year of PVC and 90,718 mt/year of vinyl chloride monomer capacity to the company's overall output.

The company has not broken down how much PVC output will increase at the three individual plants, but sources familiar with Westlake operations have said Geismar's expansion would represent most of the overall increase.

A source familiar with Westlake operations said the Geismar work would start in December, with ramp-up likely stretching into early January.

In January, Pennsylvania-based building materials manufacturer CertainTeed shut its 220,000 mt/year in-house PVC plant for economic reasons, opting to buy PVC on contract instead. Those sources said the Geismar PVC expansion would more than cover US PVC capacity lost by CertainTeed's shutdown.

Westlake's Geismar complex can currently produce 272,155 mt/year of PVC, a construction staple used to make pipes, vinyl siding and other products, and 249,475 mt/year of VCM. The plant also can produce up to 349,266 mt/year of caustic soda and 317,514 mt/year of chlorine.

The Burghausen and Gendorf plants, acquired when Westlake bought Vinnolit in 2014, have a combined capacity of 771,107 mt/year of PVC, 680,388 mt/year of VCM and 435,592 mt/year of caustic soda.

Chlor-alkali production will also be expanded with a later startup at the Gendorf plant, adding 24,947 mt/year of chlorine and 27,215 mt/year of membrane-grade caustic soda output.

Westlake's Geismar complex currently has capacity to produce 272,155 mt/year of PVC and 249,475 mt/year of VCM as well as 317,514 mt/year of chlorine and 349,266 mt/year of caustic soda, according to regulatory filings.

OTHER PVC EXPANSIONS

Shintech, the US arm of Japan's Shin-Etsu and the largest US PVC producer, is expanding output along the entire PVC chain at its Plaquemine, Louisiana, complex, with a target for startup in late 2020.

The work will increase PVC output by 58% to more than 1 million mt/year, according to applications submitted to the Louisiana Department of Environmental Quality.

The company is also building a new 1 million mt/year VCM unit and expanding ethylene dichloride (EDC) output by 680,388 mt/year, chlorine output by 635,029 mt/year and caustic soda production by 725,747 mt/year.

Chlorine mixed with ethylene makes EDC, which makes VCM, the direct precursor to PVC, a construction staple used to make pipes, vinyl siding and flooring, window frames and other products.

Formosa Plastics said in December 2017 that it was also planning to expand PVC output at its complex in Baton Rouge, Louisiana, by 136,077 mt/year. The original late-2020 startup date was later pushed to late 2021.

Shintech is the sole PVC producer expanding US output across the PVC chain, but industry executives say annual demand growth will absorb that output upon startup. Other producers have resisted capacity additions beyond de-bottlenecking projects like those at Westlake and Formosa, given the estimated cost of up to $6 billion to build all new plants and capital intensity of major expansions amid low product pricing.

"We don't believe this market is close to reinvestment economics yet," Holy said at the conference Wednesday.

"And hence, if you look at future supply growth, it's significantly below where we expect demand growth to be over at least the next five or six years."

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

-- Edited by Jonathan Fox, newsdesk@spglobal.com