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Eastman Chemical reduces ethylene production; tables cracker sale

HOUSTON, July 27, 2018 (PCW) –- Eastman Chemical on Friday said it is reducing ethylene production from its Texas crackers and is tabling the sale of those units.

Due to softer ethylene prices, the company said it would be reconfiguring its three Longview, TX, crackers at reduced rates to minimize ethylene production. In the second half of this year, the company will maximize its propane feed into those units to maximize propylene production. In 2019, Eastman would see a “modest investment” to include refinery-grade propylene into its feed slate. This would increase its polymer-grade propylene production, while reducing exposure to volatility in spot propane markets.

Overall, Eastman executives said, it would be limiting its spot ethylene sales into the end of 2019.

During that time, Eastman –- which has long been attempting to sell of its Longview units -- said it would be tabling those efforts due to “current market conditions, combined with the geopolitical environment on trade,” CEO Mark Costa said during an earnings call. “It is hard to move forward at this time.”

The company has three olefins units at Longview with a combined ethylene production capacity of 1.542 billion lbs/yr. These can currently consume a total of 15,000 b/d of ethane, 35,000 b/d of propane and 5,000 b/d of normal butane, according to PetroChem Wire estimates. The 310 million lbs/yr HCC-3A unit went down in mid-Apr for maintenance and has stayed shuttered due to low prices.

Costa said the cracker would likely stay down through year’s end as the feedstock reconfiguration work takes place.

Eastman on Friday also reported 2Q net income of $344 million, compared to $292 million during the same time a year ago due to increased sales volumes, particularly from the additives and advanced materials segments. -- Samantha Hartke

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