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May 07, 2012 02:00 AM

Sugar-based PE proves boon for Braskem

Frank Esposito
Senior Staff Reporter
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    Brazilian resins giant Braskem SA is seeing continued growth with its sugar-based polyethylene and also is advancing with joint venture expansion plans in Mexico.

    As if that weren't enough, the São Paulo-based firm also is dealing with a polypropylene feedstocks supply issue while digesting the purchase of two separate PP businesses.

    Green PE “is a very interesting niche product,” Braskem America CEO Fernando Musa said in an interview at NPE2012 in Orlando. “It's been sold mostly into packaging markets. There's a lot of demand in Asia, but demand in North America is growing as well.”

    Braskem's initial 440 million-pound-capacity plant in Brazil already is operating at more than half of its capacity, and the firm is considering a second plant there as well. A pilot plant making sugar-based PP also is in the works.

    But adoption of the green materials hasn't always been easy.

    “The product is very consumer-oriented, but Western businesses are cost-oriented,” Musa said. “So it sometimes takes awhile to demonstrate the material's value.”

    In Mexico, construction has begun on Ethylene XXI, a massive joint venture that when completed will have more than 2 billion pounds of annual capacity for high and low density PE and a similar amount of capacity for ethylene feedstock. The venture between Braskem and Mexico City conglomerate Grupo Idesa SA de CV — is expected to create 3,000 permanent jobs.

    Ethylene XXI is set to be operational in mid-2015, but Musa said officials “are trying to make it sooner.” The firm already has ethane supply contacts with Pemex, the Mexican national oil company.

    Braskem's big splash into North American PP has come in the last two years: Its acquisitions of the PP businesses of Sunoco Inc. and Dow Chemical Co. immediately made Braskem one of North America's largest PP makers.

    But that status hasn't come without its challenges, since volatility in supplies of propylene monomer have sent PP pricing haywire, causing processors to look at other materials in some cases. On top of that, Braskem was dealt a blow when Sunoco in December closed a gasoline refinery in Marcus Hook, Pa., that had been supplying the Braskem PP plant there with propylene.

    Braskem America commercial and supply Vice President Robert Nadin said the situation in Marcus Hook isn't as dire as it first appeared. Although Sunoco was the plant's largest propylene supplier, it never supplied even half of the plant's needs. Since the refinery closed, Braskem already has been contacted by several suppliers looking to fill the plant's propylene requirements, Nadin said.

    Longer-term, Nadin said North American PP demand growth should rebound and average 2-3 percent for the next several years. “We'll see strength in segments like automotive and packaging, where polypropylene is the material of choice,” he said at the show, held April 1-5 in Orlando.

    Nadin also said any products that might have switched from PP to other resins because of cost concerns already have done so. Last year's shutdown of a Phillips Sumika Polypropylene Co. plant in Pasadena, Texas, “allowed [North American] supply and demand to find balance,” he added.

    Musa said the amount of on-purpose propylene being made in North America “should increase drastically” in just the next three years. He said Braskem currently has no plans to enter into on-purpose propylene production.

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