Baystar petchems plant in Texas in 'start-up' mode after four years: Borealis CEO

The Baystar project in Texas, which foresees building a plant with capacity to produce 625,000 mt/year of polyethylene, is in "start-up" mode after four years and $1.4 billion invested by partners Borealis and TotalEnergies, the CEO of Borealis told S&P Global Commodity Insights on Oct. 2 in Abu Dhabi.

Baystar, also known as Bayport Polymers, is being started even in the midst of an oversupplied petrochemicals market, CEO Thomas Gangl said in the interview. Baystar said in a statement on Oct. 2 that the new Bay 3 polyethylene unit will more than double Baystar's production capacity.

"What we see is that after some fantastic years, 2021 and 2022, the cycle is now at the bottom and hopefully prices have bottomed," Gangl said. But even 2024 will be difficult with operating rates still below 80% on a global basis, he said. In Europe, operating rates are even lower at 65% to 70%, pushing prices up and attracting imports into the market, he said. Borealis operates petrochemicals plants in Finland, Sweden, Belgium, Germany and Austria and has the Texas project, with operating rates higher than the industry, he said, declining to be specific.

"What we see is the overbuild of the last three years on a global basis is now weighing on the operating rates," he said. As new capacity was planned, the industry had to deal with COVID, skyrocketing natural gas prices in Europe and "structural issues" in China that "all came together and this is now reducing the demand."

"What we face now is this significant overcapacity in the market and it will take some time until demand absorbs that capacity," he said.

"Demand as such is growing because the population is growing," he said. Borealis is seeing growth in demand for plastic cables to wrap around wires used in new energy sources such as wind energy, and in automotive parts used for plastic batteries, he said. Plastic parts that weigh 30 kilograms can serve the same purpose as metal parts used in cars that weigh 150 kg, he said.

Consumer products markets are "difficult," he said.

Operating rates will improve next year and 2025 will look better than 2024, he said. Next year will only start to see improvement in the second half of next year, he said.

Platts, part of S&P Global, assessed polyethylene blow molding FAS Houston at $981/mt Sept. 20. It has risen steadily since July.