[StBernard] ExxonMobil to close unit, halt OX supply from US Chalmette

[Westley Annis]

ExxonMobil to close unit, halt OX supply from US Chalmette
23 September 2009 18:46  [Source: ICIS news]

HOUSTON (ICIS news)--Orthoxylene (OX) supply from ExxonMobil's joint venture Chalmette chemical plant in Louisiana will stop by the end of the year as the company plans to shut down a paraxylene (PX) and an isomerisation unit, a market source said on Wednesday.

The source, who buys OX from ExxonMobil, said the plans have been in the works for some time - the result of poor OX demand stemming from a sharp drop in phthalic anhydride (PA) production.

ExxonMobil spokesman Kevin Allexon would not provide any information on the future of Chalmette production, where OX capacity is 70,000 tonnes/year. 

But the source said ExxonMobil will supply customers from its Baytown plant outside of Houston, Texas, which has an OX capacity of 130,000 tonne/year.

Because the Baytown plant filters most of its OX supply into internal PA production, ExxonMobil has negotiated lower OX volume contracts as a result of Chalmette's closing, the source said.

Lynne Baker, a spokeswoman with the United Steelworkers union representing workers at Chalmette, said labour representatives have been notified that the plant will shut down one of its two paraxylene units and an isomerisation unit.

Weak margins spurred the move, Baker said, but she did not give any timeline on the shutdowns.

The chemical plant is part of a refinery that is 50-50 joint venture between ExxonMobil and the Venezuelan state-owned oil company Petroleos de Venezuela SA (PDVSA).

Its aromatics production includes 270,000 tonnes/year of paraxylene (PX) as well as 185,000 tonnes/year of benzene, 360,000 tonnes/year of toluene, according to ICIS Plants and Projects. 

A US OX producer said that a removal of supply from Chalmette furthers the depletion of supply of the past few years. Lyondell permanently shut its OX plant in Houston on 12 January 2008. 

A robust rebound in the economy could cause an OX shortage in the US, the producer said.

"Certainly the PA market is off quite a bit from the heyday, but with Chalmette going down and so much capacity leaving the market in the last three or four years, PA rates don't have to get up that high before we start getting tight," the OX producer said.

The US PA market might have to start importing OX if the downstream plasticisers, unsaturated polyester resins (UPR) and alkyd resins markets get a demand boost from the automotive and housing sectors, a market source said.

US OX contract prices for September are 40.00 cents/lb ($882/tonne, €600/tonne), according to global chemical market intelligence service ICIS pricing. 

Major US producers of OX include ExxonMobil and Flint Hills Resources, while Stepan and BASF are large US buyers.

($1 = €0.68)