Sky-high raw material prices haven't grounded new developments in polyethylene, polypropylene and polystyrene at Total Petrochemicals USA Inc.
The Houston-based firm recently increased its PP production capacity by 10 percent at its massive complex in La Porte, Texas. The addition was made by modernizing and specializing production equipment at the site, according to Kim Davies, Total's polyolefins marketing and strategy manager.
The growth on one line that makes both impact and random copolymer PP became operational in March, Davies said during a recent interview in Houston.
Total also said its pipe-grade, bimodal high density PE was sole-sourced for use in 20-inch-diameter pipe by Missouri Gas & Power, which Davies said is the nation's largest natural gas pipeline. The HDPE grade has a PE-100 rating and first was commercialized in 2006.
``We've always done well in pipe,'' he said. ``We've got a huge lab and do extensive testing.''
Like many oil-based plastics, PP is singing the raw material blues because of high oil prices. Davies said PP in particular is challenged because of increased use of ``heavy'' oil-based naphtha feedstocks that produce 20 percent less propylene than do ``light'' natural gas-based ethane feedstocks. The heavy feeds are being used more because they're less expensive, but the result is a tighter market for propylene monomer one that's caused prices to climb 55 percent since January 2007.
In spite of the price and supply battle, PP still has a weight advantage over materials such as PET, Davies said. In hot-fill juice applications, PP can provide weight savings of as much as 25 percent vs. PET.
And price hikes have become an unfortunate necessity for PP makers.
``If we're just going up with monomer prices, we're losing money, because of freight costs and other expenses,'' Davies said.
The PS market has its own feedstock challenges, since those same light feedstocks produce 75 percent less butadiene, a feedstock for high- impact PS.
``Prices are up, but it's still not helping our margin,'' said national PS sales manager Todd Jagmin. ``We've been chasing cost all year.''
The North American PS market has changed dramatically in recent years, consolidating to a mere three suppliers. Total remains the only PS maker not involved in a joint venture with a former competitor.
``Three producers [are] enough to keep the market competitive,'' Jagmin said. ``There used to be enough capacity that the market might not see or feel production blips. They were relatively invisible. But now if a plant has a production issue, it's very visible in the form of spot shortages and delayed shipments.
``There also have been some opportunities created by the mergers'' to compete for business, Jagmin added. PS also retains an economic advantage over other materials in thermoformed products for food-service products, cups and cutlery, he said.
Total's new product development in PS has taken the form of a new lower-melt-flow solid PS for the foam market, where it can be used in food service and insulation. The new grade is being tested with key customers and could be fully commercialized by the end of the year, said PS product manager Tim Coffy.
``We're committed to marketing and development,'' Coffy said. ``The situation with the economy isn't affecting our active programs' development or our desire to improve. ``Our customers now are looking for ways to decrease energy usage and reduce their carbon footprint.''
In North America, Total ranks No. 4 in the PP market, with an 11 percent share, based on estimated 2008 sales. The firm ranks No. 3 in PS, with a 20 percent share, and No. 8 in HDPE, with a 5 percent share.
Total Petrochemicals USA is a unit of French oil firm Total SA. Chemicals including plastics generated 10.7 billion euros ($16.7 billion) in global sales for Total in the first half of 2008. That amount was up 6 percent over the year-ago period.