Westlake Chemical Corp.'s polyethylene business is seeing some positive signs as it works its way through a tight market in early 2010.
The domestic market is showing more signs of life, Westlake PE commercial Vice President Mike Mattina said March 23 in an interview at the firm's Houston headquarters. The tight supply dynamic can cause an element of buy-in in the marketplace. And that could be demand-driven or psychology because of tight supply.
Supplies of both PE and ethylene feedstock have been tight since the start of the year, when unseasonably cold weather hit the Houston area, where many petrochemical plants are located.
The cold nicked a lot of guys in some way, said Jeff Taylor, Westlake's senior vice president for PE. There are some limitations on work that can be done in a cold spell.
There are a couple of big planned outages coming up, and you can't just push those back. Sometimes you're not able to, even if you think this would be a good time to. For the first time in a while, the ethylene chain has led to production limitations.
Taylor added that Westlake has seen recent sales improvement in beverage overwrap and other kinds of food packaging, with some of that improvement possibly linked to seasonal demand.
The tight domestic market also may cause PE export numbers for 2010 to decrease from the sky-high levels they reached in 2009, according to Taylor.
It's all we can do to meet domestic demand, he said. There might still be export demand, but no one's going to be able to take advantage of it.
Taylor added that affordable natural gas-based feedstocks in North America could extend the lifespan of some of the region's PE plants and allow North America to remain a net exporter of PE for several more years.
On the new-product front, Westlake earlier this year introduced a PE resin with ethylene vinyl acetate content of up to 12 percent. Previously, the highest EVA level available in a Westlake PE was 6.5 percent. The new grades can give customers better heat-seal performance and more flexibility when designing multilayer packaging, said specialty polymers product manager Jay Blackburn.
Multilayer food pouches also have drawn interest in the sustainability arena, since they use less material than standard containers, Taylor added. Westlake tie-layer PE resins also can be combined with PET, nylon or other materials to extend shelf life.
When you look at solutions, the shelf life and longevity of a product are huge, Mattina said. There's a large amount of food thrown out. If we can extend shelf life with better oxygen and moisture performance, we want to improve those characteristics, so less food gets into the waste stream.
Westlake's olefins unit including PE accounted for about 70 percent of the firm's $2.3 billion sales total in 2009. The unit also posted operating income of $177 million for the year. The remainder of Westlake's sales came from its vinyls unit, including PVC resin and pipe.
Based on estimated 2008 sales, Westlake ranked third in the North American low density PE market, with a share of 16 percent. In linear LDPE, the firm held a 5 percent share, ranking fifth in the region.
Copyright 2010 Crain Communications Inc. All Rights Reserved.