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Dow plans more on-purpose propylene with cracker retrofit

HOUSTON, August 20, 2019 (PCW) – Dow Chemical announced today that it will retrofit its LA-3 cracker in Plaquemine, LA with fluidized catalytic dehydrogenation (FCDh) technology to produce more than 100,000 mt/yr of additional on-purpose propylene.

The project, which is expected online by the end of 2021, will not reduce the unit’s current ethylene production capacity of 1.066 million mt/yr. The LA-3 cracker underwent a 250,000 mt/yr expansion in 2016, which also increased its ethane cracking capability to 80%.

Dow said the retrofit will enhance asset utilization and help meet growing demand for its differentiated polyolefins products, citing consumer, infrastructure and packaging end-markets.

Propylene historically has been supplied as a byproduct of refineries or steam crackers, but the substitution of low-cost ethane for heavier cracker feedstocks has reduced the output of cracker byproducts, including propylene, creating the need for other sources of propylene to balance the market.

Because of the reduced byproduct propylene supply, the US Gulf propylene market in recent years has suffered from volatility and high prices, with OPIS PetroChem Wire’s monthly spot average for PGP topping out at a 45 cpp premium to ethylene in June 2018 and spot averages swinging as much as 15 cpp from one month to the next last year.

New propane dehydrogenation plants started up by Dow and Enterprise in the past few years have helped to smooth out the volatility and bring US Gulf propylene prices to more competitive levels in the global market.

Dow claims that its FCDh technology can reduce capital expense by up to 25% and lower energy usage by up to 20 percent compared to conventional PDH technologies. It recently licensed the technology to PetroLogistics II for a new stand-alone PDH facility that is planned for the Gulf Coast.

– David Barry,  David@petrochemwire.com

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Ethane Ships' LPG Voyages Highlight Cutthroat Feedstock Competition

August 6, 2019

Two multi-gas carriers that typically conduct "milk runs" carrying American ethane into charterer Ineos' European steam crackers have completed voyages to the Continent carrying propane and butane.

The dual cargo switch underscores two interlinked situations -- an over-supplied U.S. ethane market beset with low prices, and competition to ethane posed by compellingly priced LPG (i.e., propane and butane) for use as feedstock in steam crackers.

IHS Markit Waterborne data showed the multi-gas carrier JS Ineos Independence departing Enterprise Products Partners' export docks on the Houston Ship Channel on July 22 with a 149,040-bbl cargo of propane, and heading to Europe.

Sistership JS Ineos Ingenuity departed the Marcus Hook, Pa., export docks with a 161,400-bbl cargo of butane on July 25, also heading to Europe.

According to IHS Markit vessel-tracking data, the JS Ineos Independence appeared to be discharging its cargo in Antwerp, Belgium, at presstime. The JS Ineos Ingenuity had departed the Europoort terminal in Rotterdam in the Netherlands and was signaling Le Havre in France as its next destination.

The JS Ineos Independence cargo appears headed into tankage operated by SHV Energy, the anchor leaseholder for storage in Antwerp which imports for retail usage. The JS Ineos Ingenuity's discharge plans were less clear, though there are petrochemical feedstock outlets operated by LyondellBasell in Rotterdam and Total in Le Havre.

Both ships belong to the custom-built "Dragon Class" series of vessels, meant to fulfil Ineos' long-term U.S. ethane procurement contracts for crackers in Rafnes, Norway and Grangemouth, Scotland. Both vessels typically source ethane cargoes from Marcus Hook as well as Enterprise's ethane docks at Morgan's Point on the Houston Ship Channel.

However, since the ships' specifications allow them to carry a variety of natural gas liquid (NGL) cargoes, Ineos has the flexibility to deploy or freelance them into alternate trades if market conditions warrant such a switch.

A global macroeconomic snapshot of the prevailing economics for NGLs and olefins provide the backdrop to the dual cargo switch.

On the ethane front stateside, the OPIS-assessed price for Mont Belvieu purity ethane has slumped to just more than a dime a gallon from the end-2018 levels of 30cts/gal. This is attributed in part to surging ethane supplies that have swollen ethane inventories to long-term highs, along with weak natural gas prices that are incentivizing high ethane extraction in the field.

However, the lower ethane price has not translated into an advantage for that product as a feedstock for ethylene steam crackers. This, in turn, is because ethylene prices too are struggling and ethylene inventories also are high. This has seen existing crackers on the Gulf Coast moderate their operations while new crackers are coming on line only in slow motion, which means the hoped-for surge in demand for ethane has not yet materialized.

However, there is another major factor that is driving ethane's current weakness: competition from propane and butane as a feedstock.

Propane and butane inventories in the U.S., too, are above cyclical highs, and propane and butane prices, too, are struggling. The OPIS-assessed prices for Mont Belvieu non-TET (i.e., product stored in Enterprise Products Partners caverns) propane and butane yesterday were 44.125cts/gal and 50.1875cts/gal, compared with the end-2018 prices of 62.9375cts/gal and 75.375cts/gal, respectively.

Against this backdrop, propane and butane have established themselves as formidable feedstock competitors. Cracker economics in Europe show the same pattern, pitting ethane against an increasingly assertive slate of rivals.

In the U.S., the OPIS NGL Forwards Report yesterday noted that on cash cost basis relative to spot ethylene pricing, ethane, propane and butane all were profitable relative to U.S. spot ethylene, which was valued Tuesday morning at 18.5cts/lb. (roughly 55cts/gal) at Mont Belvieu and 24cts/lb. (71.25cts/gal) at Choctaw, La.

Most of the steam crackers in North America are "light" in terms of their feed slates, with most furnaces designated for ethane as opposed to heavier feedstocks such as propane or butane. Sources familiar with the steam cracking scene on the Gulf Coast have noted that at high severity cracking, butane in fact is the most preferred feedstock, generating a spot net margin of around 15cts/lb., versus around 11cts/lb. for ethane and 6cts/lb. for naphtha.

This has boosted petrochemical demand for butane, as cracker operators look to consume as much of it as their furnaces will allow. The measurable shift in switching from ethane to butane for a steam cracker is that the amount of ethylene is minimized. Cracking ethane can yield 75-80% ethylene; cracking propane or butane yields closer to 40% ethylene. Conversely, the opposite occurs with co-products, as cracking ethane yields less than 20% propylene and cracking propane or butane yields nearly 50% propylene.

However, while ethylene is abundant, propylene is fundamentally tight in the U.S. because there is much less of it. This is reflected in the current price of polymer-grade propylene of around 35cts/lb. ($1.50/gal). This offers more favorable bottom-line economics with the use of feedstocks other than ethane.

The substitution of ethane tankers to haul LPG instead has materialized on this canvas.

--Dermot McGowan, dmcgowan@opisnet.com

--Rajesh Joshi, rjoshi@opisnet.com

--Kathy Hall, kathy@petrochemwire.com

--Julia Giordano, julia@petrochemwire.com

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US polyethylene exports up 50% in 2019 YTD

HOUSTON, August 6, 2019 (PCW) -- US polyethylene exports during 1H 2019 surged to 4.34 million mt, up by 1.44 million mt (50%) from a year earlier, according to new Commerce Department data. That represents approximately 16,000 hopper cars worth of additional resin.

The markets attracting the most new volume have been Belgium, Vietnam and Malaysia, followed by Singapore, Brazil and Turkey.

China was one of the few countries to receive less PE volume in 1H 2019 than a year earlier. The US shipped 392,958 mt of PE to China/Hong Kong in 1H 2019, down 49,197 mt (-11%) from 1H 2018. Despite the ongoing trade war, China (including Hong Kong) was the third largest destination for US PE exports after Mexico and Belgium. 

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--David Barry, david@petrochemwire.com

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ExxonMobil Baytown Olefins Plant fire makes for a busy day for ethylene trading

HOUSTON, August 1, 2019 (PCW) -- On Wednesday, July 31 at 11 am US Central Time, an explosion occurred at the ExxonMobil Baytown Olefins Plant (BOP) yesterday due to a loss of containment on the propylene recovery unit that resulted in a fire that burned a light hydrocarbon mixture of propane and propylene. A company spokesperson reported that the impacted unit has been shut down and stabilized and the rest of the complex is operating at reduced rates.

There are three olefins units at Baytown, known as BOP (Baytown Olefins Plant), BOP-X and BOP 2X. BOP has an ethylene capacity of 2.55 billion pounds per year (3.3% of US capacity), BOP-X has an ethylene capacity of 2.3 billion pounds per year and BOP-2X (a new plant that came online in 2018) has an ethylene capacity of 3.3 billion pounds per year. The Baytown site has three propylene units designed to upgrade propylene co-product from the steam crackers. They each have a polymer grade propylene capacity of 700 million pounds per year. The affected olefins unit is a flex-cracker, meaning that it cracks mostly ethane but it has furnaces that can accept heavier NGLs. The other olefins units are ethane crackers.

Spot ethylene prices did not immediately react to the incident Wednesday afternoon; values rose from 16.25 cpp (48.5 cpg equivalent) for Aug to end the day around 17.25 cpp (51.5 cpg). On Thursday morning, however, a flurry of spot activity saw 20 new ethylene deals get done within a two-hour period , and Aug prices popped to 19.5 cpp (57.5 cpg).

-Kathy Hall, kathy@petrochemwire.com 

-Julia Giordano, julia@petrochemwire.com 

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Although the indicent damaged a propylene unit at the site, the spot propylene market did not appear to react at all. Aug po

US nonfuel use propylene inventories drop to eight-month low: EIA

HOUSTON, July 24, 2019 (PCW) -- US nonfuel use propylene inventories fell by 239,000 barrels to 4.085 million barrels last week, the lowest level since November 2018, the Energy Information Administration said today.

Propylene inventories have dropped four weeks in a row, and are down in nine of the past 12 weeks.

While still higher by 50% versus a year ago, propylene inventories are 18% lower over the past four weeks and are more than 10% below their 52-week average.

Meanwhile, US Gulf refinery utilization was down 4.3 percentage points at 91.1% last week, which is below the five-year average for this time of year. 

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--David Barry, david@petrochemwire.com

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ExxonMobil Beaumont startup leads next wave of new Gulf Coast polyethylene plants

HOUSTON, July 23, 2019 (PCW) -- ExxonMobil notified customers Monday that it has begun production on a new 650,000 mt/yr (1.43 billion lbs/yr) PE unit in Beaumont, TX, the first of several new PE plants scheduled to start up along the US Gulf Coast during 2H 2019.

The new LLDPE/mLLDPE unit is similar to two units already in service in Mont Belvieu, TX since 2017; it will increase the Beaumont site’s capacity by 65% to 1.7 million mt/yr, with access to rail and packaging facilities.

A letter to customers said the expansion will help meet strong global demand growth for products used in liquid and food packaging, construction liners and agricultural films.

Prior to commercial sale of the new products, extensive testing will be performed to confirm functional equivalence in processing and performance, the company said.

Three other PE manufacturers have startups scheduled for 2H 2019:

  • Formosa in Point Comfort, TX (400,000 mt/yr LDPE and 400,000 mt/yr HDPE/LLDPE)
  • LyondellBasell in La Porte, TX (500,000 mt/yr HDPE)
  • Sasol in Lake Charles, LA (420,000 mt/yr LDPE)

Sasol and Formosa also have olefins plants under construction and scheduled to start up later this year in support of their new resin capacity.

--David Barry, david@petrochemwire.com

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Tropical Storm Barry closes in on Louisiana: Update 1

Tropical Storm Barry was moving at 5 mph with 40 mph winds towards New Orleans at 1 pm Central Time on Thursday (July 11). The NOAA's National Hurricane Center predicted that the center of Barry will be near the central or southeastern coast of Louisiana Friday night or Saturday. 

As of Thursday afternoon, the storm's path formed a wide cone that includes Louisiana's Norco, Plaquemine, Baton Rouge, and Lake Charles areas. The cone extends into east Texas, which includes the Port Arthur/Beaumont area and also north up to Memphis. 

CLICK HERE to view a map of the storm's path and chemical production sites in the region. 

Landfall is estimated to be in Louisiana late Friday or early Saturday. Tropical Storm warnings and Hurricane watches are in effect for much of the Louisiana coast. A State of Emergency for all of Louisiana was delared by the state's governor on Wednesday (July 10). 

The slow-moving nature of the storm has created expectations of sustained heavy rains and likely flooding in many areas. 

New Orleans-area railyards have issued embargoes for all railcar traffic. The New Orleans Public Belt Railroad will conclude operations at the close of business Thursday.

The Port of New Orleans container and breakbulk terminals ceased operations on Thursday. 

Phillip 66 was shutting its Alliance refinery at Belle Chasse, Louisiana in preparation for the storm's arrival. 
 
Petrochemical & plastic production sites in the projected path of the storm include: 

 

LOUISIANA

Americas Styrenics at St James
BASF at Geismar
Deltech at Baton Rouge
Dow at St Charles (Taft)
Dow at Plaquemine
Equistar at Lake Charles
ExxonMobil at Baton Rouge
Formosa at Baton Rouge
Indorama at Lake Charles
Lone Star at Geismar
Lion Copolymer at Geismar
Marathon at Garyville
Occidental at Geismar
NOVA at Geismar
Sasol at Lake Charles
Shell at Norco
Shintech at Plaquemine
Total at Carville
Westlake at Lake Charles
Westlake at Plaquemine

TEXAS

BASF at Port Arthur
Chevron Phillip at Orange
Chevron Phillips at Port Arthur
DowDuPont at Orange
ExxonMobil at Beaumont
Flint Hills at Port Arthur    
Honeywell at Orange
Huntsman at Port Neches
    
BASF's olefins production at Port Arthur had been shut in early April for maintenance; it remained shut.    

The sites listed above represent approximately:
    -- 72 million pounds of ethylene output per day (36% of Gulf Coast capacity)
   --  17 million pounds of PGP output per day (20%)
   --  6.5 million pounds of CGP output per day (19%)

Refineries with propylene production include sites at Chalmette, Norco, Meraux, Convent, Port Allen, Belle Chasse, Baton Rouge and Lake Charles, Louisiana and Beaumont and Port Arthur in Texas. Output of RGP mix at the Louisiana sites totals 120,000 barrels per day; RGP mix output from the Texas sites totals approximately 50,000 b/d. 

-- Kathy Hall, kathy@petrochemwire.com 

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Storm targets more than 30% of Gulf Coast ethylene production

HOUSTON, July 10, 2019 (PCW)--A tropical depression in the Gulf of Mexico may develop into a hurricane by the weekend, targeting an area of Louisiana rich with petrochemical plants, according to a forecast by the National Hurricane Center.

If storms with similar projected paths are an indicator or the plants at risk, more than 35% of the Gulf's ethylene capacity and 20% of finished grade propylene capacity could be affected. 

A hurricane watch has been issued from the mouth of the Mississippi River westward to Cameron, Louisiana, according to the Hurricane Center's latest advisory. A tropical storm watch has been issued from north of the mouth of the Mississippi River to the mouth of the Pearl River.

Steam crackers in eastern and central Louisiana include Dow at St Charles (Taft), Shell at Norco, NOVA at Geismar, Dow at Plaquemine, and ExxonMobil at Baton Rouge. These units represent a combined ethylene capacity of slightly more than 36 million pounds per day (13 billion lbs/yr), or 18% of Gulf Coast output. Polymer grade propylene production in this area represents a total of nearly 9 million pounds per day (3.2 billion lbs/yr), or 10% of Gulf Coast output. Chemical grade propylene production in this area represents slightly more than 6 million pounds per day (2.3 billion lbs/yr), or 7% of Gulf Coast output. Refinery grade propylene production in this area is concentrated at the refineries at Chalmette, Meraux, Norco, St Charles, Garyville, Convent and Baton Rouge, with a total output of nearly 100,000 b/d of RGP mix.

West of those in Lake Charles are Westlake's crackers and Sasol's cracker. These units represent a combined ethylene capacity of slightly more than 11 million pounds per day (4 billion lbs/yr), or 6% of Gulf Coast output. There is very little CGP or PGP production in Lake Charles, and the area represents just 1% of Gulf Coast output. Refinery grade propylene production in this area is about 20,000 b/d.

Across the Texas border are Flint Hills Resources, Chevron Phillips and BASF at Port Arthur, ExxonMobil at Beaumont and DowDuPont at Orange. These units represent a combined ethylene capacity of nearly 25 million pounds per day (9 billion lbs/yr), or 12% of Gulf Coast output. Currently, BASF's unit is shut as it began a scheduled turnaround in early April; it is past its previously expected restart timeframe of early June. Polymer grade propylene production in this area represents a total of 8.5 million pounds per day (3 billion lbs/yr), or 10% of Gulf Coast output. Chemical grade propylene production in this area represents nearly 3.5 million pounds per day (1.25 billion lbs/yr), or 4% of Gulf Coast output. Refinery grade propylene production in this area is concentrated at the refineries at in the Port Arthur and Beaumont areas totals a little more than 50,000 b/d of RGP mix.

On the natural gas liquid (NGL) front, the export main nerve center of the Houston Ship Channel appeared to lie outside the storm’s direct path as of Wednesday afternoon, though the LPG export hub in Nederland, along the Sabine Neches Waterway some 100 miles east of Houston, could see some impact. 

--Kathy Hall, kathy@petrochemwire.com
--Julia Giordano, julia@petrochemwire.com
--Rajesh Joshi, rjoshi@opisnet.com

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Chevron Phillips, Qatar Petroleum to build ethane cracker, HDPE units in Qatar

HOUSTON, June 24, 2019 (PCW) – A new 1.9 million mt/year ethane cracker and two HDPE derivative units with combined capacity of 1.68 million mt/year are planned for Qatar, Chevron Phillips Chemical announced today.
CPC said that it had partnered with Qatar Petroleum to build the petrochemical complex in Ras Laffan Industrial City. QP will have 70% ownership, CPC 30%. Planned startup is late 2025.
CPC said it is licensing its MarTECH loop slurry process for producing HDPE at the plant and that it would also provide project management, engineering and construction services.

-- Xavier A Cronin, xavier@petrochemwire.com 

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US polyethylene spot prices hit 10-year lows

HOUSTON, June 17, 2019 (PCW) -- US polyethylene (PE) spot prices fell to their lowest levels since January 2009 last week in reaction to over-capacity and falling feedstock costs.

HDPE blow mold in the Houston railcar market closed last Friday at 36.5 cpp, according to OPIS PetroChem Wire data. LLDPE butene film has also hit 10-year lows this month, closing last Friday at 36 cpp railcar FOB Houston.
Prices were last at these levels during a stretch from November 2008 to January 2009, when the US economy was in the Great Recession and NYMEX crude oil futures were trading in the $30s/bbl.

However, while the 4Q 2008-1Q 2009 PE market was driven by weak demand and falling feedstock costs, the industry today faces a new challenge from aggressive capacity expansion that has its roots in the shale gas boom earlier this decade.

According to preliminary figures from the American Chemistry Council (ACC), US and Canada PE production for January-May 2019 totaled 20.3 billion pounds, up 7% from the same period in 2018 and up 18% from 2017.
In addition, US PE producers are scheduled to bring online five new units during 2H 2019, representing 2.37 million mt/yr (5.22 billion lbs/yr) of new capacity, or a 10% expansion of existing US and Canada capacity.

All that additional output is going into the export market, because domestic sales through the first five months of 2019 are flat from 2017.

In the past month, there have been new signs that resin consumption in China is slowing down, including a sharp drop in polyolefin imports for April. This is blamed partly on US/China trade tensions.

Market sentiment is also depressed in Southeast Asia, which along with Europe is one of the fastest-growing markets for North American PE exports.

As PE buyers in other regions see ample offers and falling prices, the tendency is to put off orders for as long as possible to hedge against further downside price risk.

If overseas buyers remain in wait-and-see mode, it will be difficult for North American manufacturers to meet their end-of-quarter inventory targets in June without further discounts for export business.

Bids are already being discussed in the low 30s cpp railcar FOB Houston, but suppliers have so far shown no inclination to accept those prices. 

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-- David Barry, david@petrochemwire.com  

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Propylene inventories drop for fifth week

 

HOUSTON, June 12, 2019 (OPIS PCW)--US nonfuel use propylene inventories trickled lower by 15,000 bbls (-0.3%) last week to 4.869 million bbls, the EIA said today. It was the fifth consecutive inventory draw, and propylene stocks have fallen in ten of the past 12 weeks. Propylene inventories are now only 539,000 bbls (12.5%) higher than their 52-week average of 4.33 million bbls. Meanwhile, US Gulf refinery utilization was off 0.2 percentage point at 94.2%, which is above the 5-year average for this time of year. 

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-- David Barry, david@petrochemwire.com  

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US Spot Ethylene Hits New Low as Bearish Fundamentals Converge

June 4, 2019

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U.S. spot ethylene traded down to new lows on Monday, with a deal in Mont Belvieu at 11.75cts/lb. and Louisiana ethylene trading down to 12.125cts/lb. in the Choctaw hub.

These prices are the lowest recorded by OPIS PetroChem Wire; this data history dates back to July 2007.

The lows are not entirely surprising, as spot ethylene has steadily been trading down from 18cts/lb. at the start of the year. Driving the trend were the classic fundamentals of any bear market: increasing supply, decreasing demand and falling upstream prices.

As more ethylene and downstream capacity comes online, more power comes into the consumer side, which naturally leads to lower pricing. A few other factors have added to the bearish pall hanging over ethylene in recent months:

  • Ebbing downstream export demand. The U.S.-China trade situation has resulted in fewer exports of finished goods to the U.S. from China, and by extension, lower demand in China for U.S. polyethylene resin. While polyethylene producers report that domestic demand has been decent, 2.37 million mt/yr (5.22 million lbs./yr) of new capacity is scheduled to start up in 2H 2019. Export requests have slowed, and prices are falling worldwide. Facing the new supply hitting the market and holding onto material that was earmarked for export has created a nervous atmosphere in the plastics markets.
  • Domestic demand from construction stemmed by weather. Heavy rains, frequent storms and flooding have jammed up construction projects throughout the U.S. during its busiest season. Plastic pipe markets (PVC and polyethylene) in particular have been hit the hardest, as wet soil results in delays in not just construction activity but also in agricultural planting schedules. Pipe manufacturers report slowdowns in the municipal, conduit and irrigation pipe demand.
  • Slower demand from flooring, window, door, siding and decking sectors. Producers of these products report that changes in U.S. income tax returns have resulted in a drop of home improvement projects, and a need for their products during 2Q when most citizens typically receive (and spend) their tax returns.
  • Low feedstocks pricing. May was a brutal month for heavier NGLs, as propane slipped below 50cts/gal and butane dropped below 60cts/gal. Ethane has managed to stay above 20cts/gal. Ethylene production costs based on ethane as a feedstock were slightly above break-even levels (relative to spot ethylene) and were under water using propane or butane.

Propylene prices were also falling Monday, but were still significantly higher than ethylene and they remained attractive co-product markets. Polymer-grade propylene was offered down to 34.25cts/lb., 2cts/lb. below where it traded on Friday, but bids have not come above 33cts/lb. With propane in the mid-to-upper 40s cents per gallon range, ethylene at 11.75cts/lb. and refinery-grade propylene at 24cts/lb., PGP margins were relatively healthy using any production method (PDH, metathesis, splitting).

Butadiene pricing was also relatively strong, with June contracts set at 46cts/lb.

– Kathy Hall, kathy@petrochemwire.com  

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