Westlake adding PVC capacity, switch to ethane feedstock

By Frank Esposito
Senior Staff Reporter

Published: October 3, 2012 6:00 am ET

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HOUSTON (Oct. 3, 3:05 p.m. ET) — Westlake Chemical Corp. is increasing its investment in Calvert City, Ky., with plans to increase annual production capacities for PVC resin and ethylene feedstock.

Houston-based Westlake will spend between $210 million and $240 million to add almost 200 million pounds of PVC capacity and 180 million pounds of ethylene capacity at the site. The expansions are part of a switch from propane to ethane feedstock there to take advantage of newfound supplies of North American natural gas, which can be used to make ethane.

“These announced projects demonstrate our commitment to our overall integration strategy and to leveraging our access to low-cost feedstock,” President and CEO Albert Chao said in an Oct. 2 news release.

The ethylene expansion and feedstock conversion are expected to be complete in mid-2014, with the PVC expansion coming online by the end of that year, officials said in the release. When the expansions are complete, the Calvert City plant will have annual capacities of 1.3 billion pounds of PVC and 630 million pounds of ethylene.

Westlake earlier had announced plans to spend $40 million to upgrade infrastructure in Calvert City. The firm also is adding more than 200 million pounds of ethylene capacity at its plant in Lake Charles, La., early next year.

PVC has weathered the post-recession world better than most North American commodity resins, largely by focusing more attention on export sales as the domestic construction market struggled. U.S./Canadian PVC sales were up five percent through July, with exports accounting for 35 percent of total sales.

In Kentucky, Westlake has preliminary approval for $10 million in tax incentives. Another $7 million in incentives are pending. The expansion projects are expected to create 300 construction jobs.

News of the expansion continues an eventful year for Westlake. It began in January when the firm made a bid to acquire rival Georgia Gulf Corp. Westlake withdrew that bid in May. Two months later, Georgia Gulf agreed to merge with the commodity chemicals business of PPG Industries to create a new company.

Westlake’s lineup of plastics and chemicals includes PVC, low density polyethylene, ethylene, vinyl chloride monomer and caustic soda, as well as PVC pipe and related products through it North American Pipe unit.

The firm posted sales of almost $2 billion in the first half of 2012, up almost nine percent vs. the same period in 2011. Westlake’s first-half profit grew almost 24 percent to $203 million in the same comparison. Olefins – including LDPE – accounted for more than 70 percent of the firm’s first-half sales.

On Wall Street, Westlake’s per-share stock price has enjoyed a tremendous ride so far in 2012. The price began the year around $40 but was near $74.30 in late trading Oct. 3 – an increase of more than 80 percent.


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Westlake adding PVC capacity, switch to ethane feedstock

By Frank Esposito
Senior Staff Reporter

Published: October 3, 2012 6:00 am ET

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