Indorama Acquisitions Show Chemical Investments Still in Play in U.S.

Researched by Industrial Info Resources (Sugar Land, Texas)--The company logo for Indorama Ventures Public Company Limited (IVL) (Bangkok, Thailand) includes the phrase, "Closer than you think," and the global producer of polyethylene terephthalate (PET), related feedstocks and other materials seems to be making good on that claim in North America. IVL said this week it will acquire a 1.8 million ton-per-year petrochemicals plant in Decatur, Alabama. In September, Indorama announced it would acquire a dormant ethane cracker in Sulphur, Louisiana, and revive it through a $175 million investment.

The two transactions speak loudly of the positive investment momentum still in play in the U.S. as a result of the shale gas boom. They are also signs of IVL's push to vertically integrate its businesses in North America and elsewhere, and of the company's penchant for acquisitions in order to expand its footprint. For related information, see January 6, 2016, article - Ethylene Review 2015: Capacity Investments Advance, Maintenance & Repairs Drop, and January 7, 2016, article - Ethylene Outlook 2016: North America to See Substantial Turnarounds, Capacity Growth.

The Decatur plant purchase marks the eighth major acquisition by IVL across the globe since January 2015. Chief Executive Officer Aloke Lohia said: "For IVL, these bolt-on acquisitions are a definitive leap forward on our path to higher growth and higher margins."

IVL says it has roughly a third of the North American PET market, with a current capacity of 1.5 million metric tonnes per year.

Located in northern Alabama, the 50-year-old Decatur complex can produce 1 million tons per year of purified terephthalic acid (PTA), which is used for the production of PET, as well as paraxylene (PX), a raw material for PTA production. The complex also produces naphthalene dicarboxylate (NDC), a specialty chemical used in new-generation polyesters and resins used to make LCD flat-panel displays, ultra-thin data storage tape and other products. Neither BP nor IVL disclosed the value of the acquisition.

The Decatur plant presumably would provide feedstock to a nearby 1.2 billion-pound-per-year PET unit addition project that was announced by AlphaPet (Decatur), a subsidiary of IVL. The $190 million addition is still in the project justification phase and would double the plant's PET capacity. The project, which was initially set for construction kickoff in 2013, has encountered a substantial delay, and the start of construction is now set for November 2017, with completion at the end of June 2019.

IVL also announced early last year the acquisition of a 600,000 ton-per-year PTA plant in Montreal, Canada, from an affiliate of Cepsa Química SA (Madrid, Spain) and a subsidiary of Investissement Québec (Montreal).

The acquisition of the Louisiana ethane cracker, which has been idled since 2001, will give IVL a leg up on its competitors, according to the company. "We are targeting a commercial startup before the end of 2017, which will make us the first Thai company to take advantage of the shale gas revolution in the United States and ahead of the greenfield crackers being constructed," Lohia said. "The integration economics with olefins will provide IVL with a significant long term cost advantage across its North American footprint."

IVL produces purified ethylene oxide (PEO) and mono ethylene glycol (MEG) in the U.S., for which ethylene is the feedstock.

The Louisiana plant was formerly operated by LyondellBasell Industries (NYSE:LYB) (Rotterdam, The Netherlands) and owned by Occidental Chemical Corporation (NYSE:OXY) (Houston, Texas). The revamped cracker would produce 850 million pounds per year of ethylene and 6 million pounds per year of propylene.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.