Profile: Westlake Chemical Corp (WLK.N)

WLK.N on New York Stock Exchange

71.40USD
21 Nov 2014
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$0.66 (+0.93%)
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Westlake Chemical Corporation, incorporated on September 3, 1991, is a vertically integrated manufacturer and marketer of basic chemicals, vinyls, polymers and fabricated building products. The Company's products include some of the widely used chemicals in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, residential and commercial construction as well as other durable and non-durable goods. In July 2014, the Company acquired Vinnolit Holdings GmbH and its subsidiary companies from Advent International. In July 2014, Westlake Chemical Corp acquired Vinnolit Holdings GmbH, an Ismaning-based manufacturer of polyvinyl chloride (PVC).

The Company operates in two principal business segments, Olefins and Vinyls, and the Company is an integrated producer of vinyls with substantial downstream integration into polyvinyl chloride (PVC) building products. As of February 15, 2013 , the Company had 11.8 billion pounds per year of aggregate production capacity at 13 manufacturing sites in North America. The Company also has a 59% interest in a joint venture in China that operates a vinyls facility.

Olefins Business

Olefins are the basic building blocks used to create a wide variety of petrochemical products. The Company manufactures ethylene, polyethylene, styrene and associated co-products at its manufacturing facility in Lake Charles and polyethylene at its Longview, Texas facility. The Company has two ethylene plants, two polyethylene plants and one styrene monomer plants at its Lake Charles complex. The Company has three polyethylene plants and a specialty polyethylene wax plants at its Longview facility. The Company has the capacity to produce 2.5 billion pounds of ethylene per year at its Lake Charles complex and the capability to consume all of its production internally to produce polyethylene and styrene monomer in its Olefins business and to produce VCM and EDC in its Vinyls business. The Company also produces ethylene in its Vinyls segment at its Calvert City facility, all of which is used internally in the production of VCM.

The Company is the producer of LDPE in North America based on capacity. During the year ended December 31, 2012, its annual capacity of 1.5 billion pounds was available in numerous formulations to meet the needs of its diverse customer base. The Company also has the capacity to produce 980 million pounds of LLDPE per year in various different formulations. The Company's Lake Charles and Longview facilities have the capability to produce HDPE. The Company produces LDPE and LLDPE at both Lake Charles and Longview. The Company sells polyethylene to external customers as a final product in pellet form. The Company produces styrene at its Lake Charles plant, where the Company has the capacity to produce 570 million pounds of styrene per year, all of which is sold to external customers.

The Company is an integrated along its olefins product chain. The Company produces ethylene required to produce its polyethylene, VCM and styrene. Ethylene can be produced from either petroleum liquid feedstocks, such as naphtha, condensates and gas oils, or from natural gas liquid feedstocks, such as ethane, propane and butane. One of the Company's ethylene plants uses ethane as its feedstock and the other can use ethane, ethane/propane mix, propane, butane and naphtha. The Company owns a 50% interest in a 104-mile natural gas liquids pipeline from Mont Belvieu, Texas to its Lake Charles complex. The Company also owns a 200-mile ethylene pipeline that runs from Mont Belvieu to its Longview facility.

In addition to the Company's internally supplied ethylene, the Company also acquires ethylene from third parties in order to supply a portion of its ethylene requirements. The Company acquires butene and hexene to manufactures polyethylene and benzene to manufacture styrene. The Company receives butene and hexene at the Lake Charles complex and hexene at the Longview complex via rails car from several suppliers. The Company receives benzene via barges, ships and pipelines pursuant to short-term arrangements. The Company purchases butene and hexene pursuant to multi-year contracts, some of which is renewable for an additional term subject to either party to the contract notifying the other party that it does not wish to renew the contract.

The Company competes with Chevron Phillips Chemical Company LP, The Dow Chemical Company, ExxonMobil Chemical Company, INEOS (successor to BP Chemicals Ltd.), LyondellBasell Industries and NOVA Chemicals Corporation.

Vinyls Business

Principal products in the Company's integrated Vinyls segment include PVC, VCM, EDC, chlorine, caustic soda and ethylene. The Company also manufactures and sells building products fabricated from PVC, including pipe, fence and deck, and window and door components. The Company manages its integrated Vinyls production chain, from the basic chemicals to finished building products, to optimize product margins and capacity utilization. The Company's primary manufacturing facilities are located in the Company's Calvert City and Geismar, Louisiana complexes. The Company's Calvert City facility includes an ethylene plant, a chlor-alkali plant, a VCM plant, a PVC plant and a diameter PVC pipe plant. The Company's Geismar facility includes an EDC plant, a VCM plant and a PVC plant. As of February 15, 2013 , the Company operated and owned 10 building product facilities and owned a 59% interest in a joint venture in China that produces PVC resin, building products and PVC film and sheet.

The Company has the capacity to produce 1.1 billion pounds of PVC per year at its Calvert City facility and 600 million pounds per year at its Geismar facility. The Company has the capacity to use a majority of its PVC internally in the production of its building products. The Company uses ethylene and chlorine to produces VCM. The Company has the capacity to produce 1.3 billion pounds of VCM per year at its Calvert City facility and 550 million pounds per year at its Geismar facility. The majority of the Company's VCM is used internally in its PVC operations.

The Company combines salt and electricity to produces chlorine and caustic soda, commonly referred to as chlor-alkali, at its Calvert City facility. The Company uses its chlorine production in its VCM plants. The Company has the capacity to supply approximately 50% of its chlorine requirements internally. The Company purchases the remaining amount at market prices. The Company's caustic soda is sold to external customers who use it for, among other things, the production of pulp and paper, organic and inorganic chemicals and alumina. The Company uses the ethylene produced at Calvert City internally to produce VCM, and Calvert City has the capacity to produces approximately 50% of the ethylene required for its total VCM production. The Company obtains the remainder of the ethylene the Company need for its Vinyls business from its Olefins business and from third party purchases.

The Company manufactures and market water, sewer, irrigation and conduit pipes products under the North American Pipe brand. The Company also manufactures and markets PVC fence, decking, windows and door profiles under the Westech Building Products brand. The Company owns a 59% interest in Suzhou Huasu Plastics Co. Ltd., a joint venture based near Shanghai, China. The Company produces of the ethylene, all of the VCM and PVC and approximately 50% of its chlorine requirements used in its Vinyls business. The remainder of the Company's chlorine requirements is purchased at market prices. Ethylene produced at the Company's Calvert City facility utilizes propane feedstock. In October 2012, the Company announced a project for the conversion of the feedstock for its Calvert City ethylene plant from propane to ethane and the planned increase in ethylene capacity from 450 million pounds annually to 630 million pounds annually.

The Company competes with Formosa Plastics Corporation, Axiall Corporation, Oxy Chem, LP and Shintech, Inc.

Company Address

Westlake Chemical Corp

SUITE 600, 2801 POST OAK BLVD
HOUSTON   TX   77056
P: +1713.9609111
F: +1302.6555049

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