Shin-Etsu evaluating US ethylene investment

02:01 AM | March 6, 2014 | Robert Westervelt in Tokyo

Shin-Etsu (Tokyo) is studying plans to build a world-scale ethylene plant in the United States, executive chairman Chihiro Kanagawa tells CW.

Ethylene capacity would be 1 million m.t./year and the company is in preliminary discussions with technology suppliers, Kanagawa says. There is a “much more than 50%” chance that the company will decide in favor of building a US cracker, he adds. The company expects to make a final decision in 6-12 months. Site locations are under evaluation but the company is leaning toward Louisiana. “Plaquemine would be the most probable location,” Kanagawa says. “Ideally, we want the plant next door to our downstream operations.”

Shin-Etsu is the largest US and global maker of polyvinyl chloride (PVC) and currently purchases all of its US ethylene requirements under long-term contracts. Shin-Etsu’s current US PVC capacity is 2.65 million m.t./year, a roughly 34% share of US production.

Since 2008, Shintech, Shin-Etsu’s US PVC subsidiary, has operated an integrated chlor-alkali and vinyls complex at Plaquemine, LA, which is now the company’s US base for expansion. The Plaquemine facility started production in 2008 with 450,000 tons/year of chlorine; 750,000 m.t./year of vinyl chloride monomer (VCM); and 600,000 tons of PVC. In 2011, the company expanded VCM by 800,000 m.t./year and chlorine by 500,000 tons/year. The company has 5,700 acres of land in Plaquemine.

Shintech announced separate plans last June to invest $500 million to expand chlor-alkali, vinyl chloride monomer (VCM), and polyvinyl chloride (PVC) at sites in Louisiana. Project completion is targeted for 2015. The chlor-alkali and VCM expansion will be at Plaquemine and expansion of PVC will be at its Addis, LA site. Shin-Etsu said this investment will boost PVC and VCM capacities each by 300,000 m.t./year and caustic soda capacity by about 200,000 tons/year. The investments will lift Shin-Etsu’s US PVC capacity to 2.95 million m.t. across sites in Louisiana and at Freeport, TX.

OxyChem, Formosa Plastics, and Westlake Chemical—the second-, third-, and fifth-largest US PVC producers, respectively—have captive ethylene production. Axiall, the fourth-largest US PVC producer, recently announced its own plans to build a 50-50 jv cracker with Lotte Chemical in Lake Charles, LA as part of a plan integrate part of its current annual ethylene requirements. There have been more than 10 announced US cracker projects.