Westlake Chemical Corp. is keeping an eye on the Caribbean as it works to grow its polyethylene business.
Houston-based Westlake is planning a $1.5 billion petrochemical plant in the Caribbean island nation of Trinidad and Tobago. Construction of the plant - to be located on Trinidad - is expected to begin later this year. When completed, the plant will have annual capacities of 1.3 billion pounds for both PE and ethylene feedstock.
Trinidad has access to lower-cost natural gas and will allow Westlake to supply customers in both North and South America, Westlake PE Vice President Jeff Taylor said in a recent interview in Houston.
``It's part of our confidence in the Americas as a place to do business,'' said Taylor, who joined Westlake in 2002 and has worked in the PE industry for almost 30 years. ``The new plant will provide a better overall cost base for our production.
``Demand in the Americas continues to grow, and this fits in well with our plans.''
The plant will be the first polymer plant in Trinidad and Tobago, although the nation has produced methanol for many years.
Elsewhere, Westlake is working to integrate PE products it acquired when it bought the PE business of Eastman Chemical Co. for $255 million last year.
``In some respects, Eastman is a classic example of a bolt-on acquisition,'' Taylor said. ``Their business looks very similar to ours in terms of technology and markets, and it also provides us with a lot of additional product offerings with more differentiated grades.''
The acquisition included Eastman's Energx-brand catalyst technology, which can produce enhanced grades of linear low density for film and bags and flexible packaging.
Westlake also gained Emac-brand specialty polymers, which are used as adhesion tie layers for unlike layers such as nylon and ethylene vinyl alcohol in flexible packaging, product specialist Erik Keracik said. Emac also can be used as an impact modifier in trays made of crystalline PET.
Another former Eastman business that's added to Westlake's product mix is Epolene, a PE-based wax used as a lubricant in compounds based on PVC and other materials. Epolene also can be used as a processing aid in pigment dispersion, Keracik said.
Where the larger PE market is concerned, Taylor said he generally agreed with predictions by industry watchers that North American PE demand will grow at about 1.5 times that of gross domestic product in the near future. He added that tracking that demand growth is no easy task.
``Overall, the market is growing,'' Taylor said. ``But looking month to month or quarter to quarter can distort the demand picture and make it look much more dramatic.
``For processors, they believe it pays to buy ahead of a price increase, then once everybody's full of inventory, it goes the other way. That has created a series of minicycles that are hard to manage for both the producer and the processor.''
Taylor also explained Westlake's PE focus.
``Flexible packaging and bags are consumer-driven and part of their nondiscretionary spending,'' he said. ``It's a better foundation because people buy food in any economy.''
Westlake also is coping with the ongoing consolidation of both its customer base and of its competitors in the PE field.
``The key way to deal with [consolidation] is make sure we offer a wide mix of products,'' Taylor said. ``If there are fewer suppliers, people will want those with a broader product portfolio.''
Westlake ranks second in North American LDPE sales, with a market share estimated at 16 percent. The firm also is a major producer of PVC resin, and of plastic pipe through its North American Pipe Corp. unit.
Westlake posted 2006 sales of almost $2.5 billion and profit of about $195 million. It operates 14 U.S. production sites and single sites in Canada and China.