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Lotte Chemical USA starts commercial operations at new ethane cracker and MEG plant in USA

September 10/2019

MOSCOW (MRC) -- Lotte Chemical Titan Holding (Kuala Lumpur, Malaysia), an affiliate of Lotte Chemical (Seoul, South Korea), has announced that the group's ethane cracker and ethylene glycol (EG) plant at Lake Charles, Louisiana, commenced commercial operations in August, reported Chemweek.

Lotte Chemical USA, a 40/60 joint venture (JV) between Lotte Chemical Titan and Lotte Chemical, holds the Lotte group's stakes in the plants.

The USD3.1-billion ethane cracker is an 88/12 JV between Lotte Chemical USA and Axiall, a subsidiary of Westlake Chemical. Lotte has invested about USD1.9 billion in the JV. Lotte Chemical USA owns 100% of the EG plant.

The USD1.1-billion EG plant has a production capacity of 700,000 metric tons/year. According to data from IHS Markit, Lotte will also produce diethylene glycol, with a capacity of 65,000 metric tons/year; triethylene glycol, 7,000 metric tons/year; and ethylene oxide (EO), 500,000 metric tons/year, at the 250-acre Lake Charles site. The cracker has capacity for 1 million metric tons/year (MMt/y) of ethylene.

Lotte will offtake approximately 50% of the ethylene for the EG plant and Axiall will take roughly 10%, in line with their shareholdings. Lotte will sell the remaining 40% of the ethylene output to Axiall for that company's use. The Lake Charles EG unit is thought to be the largest in the US.

Lotte says that ethane derived from locally produced shale gas is used as feedstock at the cracker. The company says it intends to reduce its overall dependence on naphtha and increase the use of shale gas through full operation of the Lake Charles plant. This would mitigate the risk from oil-price fluctuations and stabilize cost competitiveness, Lotte says.

Industry analysts say that the US project will likely lift Lotte Chemical's annual sales and operating profit by 1 trillion South Korean won and W200 billion, respectively. The company reported second-quarter net profit down 53.2% year on year (YOY) to W271 billion (USD224.8 million), on sales of W4 trillion, down 6.8% YOY.

Lotte is the first South Korean petrochemical company to enter the ethane-cracking business in North America using shale gas. Lotte Chemical operates naphtha crackers at Yeosu and Daesan, South Korea, and Lotte Chemical Titan operates a cracker at Pasir Gudang, Malaysia. Lotte says that the US cracker increases the group's overall ethylene capacity to 4.5 MMt/y, making it the seventh-biggest producer of ethylene worldwide.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.
Author:Margaret Volkova
Tags:PP, PE, monoethylene glycol (MEG), PP block copolymer, homopolymer PP, ethylene, Axiall Corporation, Honam Petrochemical, Lotte Chemical, Westlake Chemical, Russia, USA.
Category:General News
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