Eastman Chemical's planned maintenance at its Longview, Texas cracker is complete, executives said on the company's earnings call today.
The 701mn lb/yr unit was taken down for planned maintenance 23 September. The turnaround, which occurs every five years, cost the company approximately $20mn, said chief financial officer Curt Espeland.
Separately, Eastman announced it received a favorable ruling from the Texas Railroad Commission over tariffs on and the allowance of bi-directional flow on Westlake's pipeline connecting Eastman's Longview plant with Mont Belvieu, Texas.
Eastman uses 100pc of propylene and roughly 50pc of ethylene produced at Longview on site in its own polymer production. The remaining ethylene is sold to Westlake Longview, a nearby subsidiary of Westlake Chemical, or shipped to Mont Belvieu via the pipeline. Westlake sought to eliminate backhaul service on the line, which the commission ruled would leave Eastman's ethylene stranded in the Longview market.
"The proposed tariff changes in the 2013 Westlake Pipeline Tariff related to backhauling physically shuts Eastman out of the pipeline," the railroad commission stated in its findings issued 20 October. "The legal effect of the revised tariff is to deny Eastman access."
Eastman reported third quarter earnings fell 32pc from last year due to the acquisition of specialty chemical maker Taminco and restructuring related charges and other one-time items that offset revenue growth. Eastman reported a profit $210mn in the third quarter, down from $308mn a year earlier.
Eastman is focusing its business on higher margin speciality products rather than olefins, Espeland told analysts, noting that bulk ethylene sales reflected approximately 2pc of revenue during the third quarter and that the olefins business is only 15pc of the company's earnings.
"At the end of the day Eastman is not an olefins play," Espeland said. "As we grow our specialty products [olefins] will be an even smaller part of our portfolio in 2015."
Eastman reported higher sales of additives and functional products, but operating earnings for that segment fell due to higher raw material and energy costs.
With a glut of US propane production, Eastman is revising its strategy to hedge propane several years forward from previous six-month outlook.
Eastman hedged propane at just over a 100¢/USG through the fourth quarter and 2015, Costa said.
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