USA Olin resumes VCM unit production

Olin’s vinyl chloride monomer (VCM) unit with an 835,000 tons/year capacity, located in Freeport, Texas resumed production after a multi-week shutdown, sources close to the company said on 9 August 2023.

The company had an initial shutdown in March that lasted about two months longer than expected, returning to production around mid-June only to shut the unit down again on July 12 to conduct some equipment repairs.

As a consequence, Shintech, a major US PVC producer had filed a lawsuit for federal breach of contract against Olin. Olin is contractually obliged to provide 50% of its VCM to Shintech’s 1.45 million tons/year PVC plant in Freeport, while Shintech sources the other 50% from its complex in Plaquemine, Louisiana.

Shintech has been running its PVC plant at compromised rates during Olin’s VCM shutdown, disrupting an already tight US PVC supply, especially for exports.

The ongoing legal issues sprouted from Olin’s supply contract with Shintech. Back in March, Olin had notified Shintech it would stop supplying VCM when the unit resumes production from its initial shutdown because Shintech had miscalculated prior payments and currently owe Olin $18 million.

Despite disputing at first, Shintech later paid the $18 million when Olin agreed to continue supplying VCM once their plant is up and running. The deal ensued but at reduced rates until Olin halted production once again in mid-July.

Shintech’s lower PVC outputs had played into an overall diminish in US PVC supplies because of outages and planned shutdowns elsewhere. As per market sources, US PVC prices were at $755/ton FAS Houston on 2 August 2023, 10% higher than in early July.