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June 30, 2008 02:00 AM

LyondellBasell plans Caribbean PP plant

Frank Esposito
Senior Staff Reporter
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    The North American polypropylene market has seen better days — but it may have found a bright horizon on a Caribbean island.

    By 2012, PP leader LyondellBasell Industries AF SCA plans to open an integrated PP plant on Trinidad with annual capacity of 1 billion pounds of PP, made with propylene monomer converted from methanol.

    Advantages to the site include the presence of 600 billion cubic meters of proven natural gas reserves, a democratic government and a 50-year-old petrochemical industry, said LyondellBasell's Craig Blizzard, who spoke June 9 at the TEMPI 08 conference in Las Vegas, held June 9-10. The event was hosted by Townsend Polymer Services & Information of Houston.

    PP made in Trinidad would be distributed through the firm's global network, Blizzard said.

    Trinidad also offers available land, skilled labor and easy access to North and South America. LyondellBasell, based in Rotterdam, Netherlands, will be the first plastic resins producer located there, according to Blizzard.

    Looking forward to 2012 could be preferable to dealing with the current North American PP market, where sales through April are down about 6 percent compared with the same period in 2007. The export market, which propped up weak domestic demand in 2007, has not done the same in 2008 — it's also down about 6 percent.

    Blizzard, LyondellBasell's North American business director, cited turndowns in three key PP segments — fibers, automotive and appliances — as reasons for the tough start to 2008. Imports of finished goods made from PP also are playing a role, as is a reduction in the volume of PP components and finished products exported from North America to other parts of the world, he said.

    ``Hopefully, the weak dollar will turn exports back a little bit. But we've also seen customers have ongoing success in making lighter- weight products of polypropylene, like film and auto bumpers.

    ``Auto and carpet markets are economically driven, and white goods like appliances might be affected by imports. Sales of housewares and consumer products also can increase in a recession. Most of our customers say they're holding their own, so it's a little hard to find out who's actually down,'' Blizzard said.

    LyondellBasell and other PP makers have reacted to market conditions by closing older, less-efficient plants.

    The net loss of the industry's combined moves has taken 500 million pounds of PP production out of North America. Lower operating rates in the region ``are managing to keep inventory at bare bones,'' Blizzard said.

    North American PP makers and users also will be dealing with the impact of billions of pounds of new capacity being added in the Middle East over the next few years.

    The path forward for North American PP processors, according to Blizzard, could include:

    * Continuing to buy PP domestically or buy from emerging suppliers outside of North America.

    * Buying finished PP goods and intermediates outside of the U.S.

    * Collocating new manufacturing facilities at sites where PP is produced.

    ``In the U.S., many of our customers are thousands of miles away from the Gulf Coast where polypropylene is produced,'' he said.

    Potential deterrents to imported PP include logistic issues, such as getting the resin from a 55-pound sack and then into a hopper car and on to customers, he said. ``Those costs could add $200 per ton to the price, and that cuts the advantage [of imported resin] a lot,'' Blizzard said.

    The type of resin available for import also might not be what all PP processors are looking for anymore.

    ``Customers have become more sophisticated, which is good thing for us,'' Blizzard said. ``Their machines are tuned for specific resins, and anyone importing will have to get into the groove of that. If they just turn on a spigot and the material might not be good, what do they do? Do they say that the next ship's coming in a month from today?''

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