Brazil's Braskem Pushes Polypropylene Production Projects in U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas)--Brazilian petrochemicals giant Braskem (NYSE:BAK) (Sao Paulo) continues to make inroads in the U.S. via a slate of polypropylene (PP) projects.

Industrial Info is tracking eight Braskem polypropylene-related capital projects in the U.S., including a unit addition that would add 450,000 tons to 500,000 tons of annual production capacity at its La Porte, Texas PP plant.

Linde Group (Munich, Germany) has the engineering, procurement and construction contract for the La Porte project, which is expected to receive final approval by the end of this year. Construction kickoff is expected in third-quarter 2017, with completion in second-quarter 2019. Other projects in the U.S. include three debottlenecks.

Chief Executive Officer Fernando Musa said during Braskem's recent third-quarter 2016 earnings conference call that one of the company's priorities this year has been to seek PP growth opportunities as a result of competitive propylene prices in the U.S. PP operations in the U.S. and Europe approached 101% capacity utilization in the just-ended quarter, he said. "In the U.S. and Europe, expectation is for a healthy PP-propylene spread despite volatility due to high volumes of PP imported, debottlenecking of some units in the United States and lower propylene supply in Europe due to the use by crackers of the imported gas as a feedstock," he continued.

Musa said he expects the U.S. cost position for propane to remain favorable, adding Braskem remains the largest buyer of propylene in the U.S. market.

Braskem has had a propane purchase contract with Enterprise Products Partners L.P. (NYSE:EPD) (Houston, Texas) since 2012. Enterprise's 1.65-billion-pound-per-year propane dehydrogenation (PDH) unit in Mont Belvieu, Texas, is expected to see completion in April 2017. "This is a long-term contract that was signed back in 2012," Musa said. "Their project is delayed, but it was in the window that exists in the contract before the startup date. So, there is no trigger of any penalty on the Enterprise side because of any delays. So, we do expect to start receiving volumes from the PDH paid contracts during 2017."

For related information, see August 19, 2016, article - Enterprise Products Expects to Complete $1.4 Billion in Growth Projects in Second-Half 2016.

U.S. Ethane to Hit Brazil in Second-Half 2017
Meanwhile, Braskem is progressing on plans to import ethane from the U.S. to feed its cracker in Camacari, Brazil, as early as the second half of 2017, according to Musa. "The concept here is a concept of flexibility, so we will have the flexibility to either crack naphtha or ethane. We do believe that ethane cracking will be competitive, even though it will land in Camacari, we have cost addition because of the logistics compared to U.S. cracking, but given that this is an addition and flexibility into a much larger cracker, the economics are interesting."

For related information, see March 23, 2016, article - Enterprise Products Expects to Complete Ethane Export Terminal this Summer.

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