Enterprise Products Partners' new 750,000 mt/year propane dehydrogenation plant will continue undergoing commissioning for a further month, CEO Jim Teague said Wednesday.
"We are operating our PDH facility, which is producing polymer-grade propylene. We expect commissioning to last another month," Teague said during the company's quarterly earnings call.
"By the end of February, things ought to be humming along, that's our plan," Teague said when asked when the PDH would be fully operational.
Enterprise had repeatedly delayed the new unit's startup. The company intended to begin operations in July 2017, but was still commissioning when Hurricane Harvey hit the Texas Coast in late August, causing further delays.
Its full startup comes after strong propylene pricing in January stifled demand in downstream markets, leading to reduced run rates, particularly for polypropylene, according to market sources.
Last week spot polypropylene prices reached a three-year high on the back of high feedstock propylene pricing because of an ongoing outage at Dow Chemical's 750,000 mt/year PDH plant in Freeport, Texas, and the delayed startup of Enterprise's new unit in Mont Belvieu, Texas.
However, the highs were short-lived amid growing market talk of improving supply and weaker demand from downstream producers because of expectations that Dow will restart its PDH plant in early to mid-February, and Enterprise's production of on-spec propylene during commissioning.
"Every pound we produce in the PDH during commissioning is sold to our customers as we go. We're selling PGP right now on a propane basis," R.B. Herrscher, senior vice president of unregulated NGL assets and petrochemicals, said during Wednesday's earnings call.
Market sources said polypropylene producers are not inclined to produce volumes in excess of contractual obligations amid reluctant buyers who expect a declining market.
Diminished demand comes after a fire erupted Thursday at Braskem's polypropylene plant in Freeport, Texas, and polypropylene producer Pinnacle Polymers declared force majeure last week, citing production issues stemming from recent severe cold snaps.
In addition, high US propylene prices prompted a major buyer to secure cargoes from Brazil and Europe, adding more downward pressure from reduced export demand.
Enterprise has said the new PDH plant aims to fill a gap of propylene output lost to ethane cracking and export excess supply. Cracking ethane yields mostly ethylene and no propylene, while cracking propane, butane or naphtha yields 15% to 17% propylene and less ethylene.
