Westlake Chemical takes $40 million hit on plant shutdown

Houston-based Westlake Chemical is restarting its petrochemical complex in Kentucky after a mechanical failure caused a shutdown almost 50 days ago.

Westlake said Monday it will report a $40 million loss for the period. The Calvert City plant has been offline since June 1.

Westlake said the shutdown will negatively affect second- and third-quarter earnings. Westlake said it will report the financial loss through a force majeure declaration, which is considered an unforeseeable circumstance.

Westlake plans to expand the plant by adding 70 million pounds of annual capacity to produce ethylene, a primary building block of plastics. Many chemical companies in the U.S. have boosted their ethylene production because of the cheap and abundant natural gas from U.S. shale that serves as a primary feedstock in the petrochemical manufacturing process. The project was expected to be completed by mid-2017.

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The financial hit from Kentucky comes at a time when Westlake is in the midst of acquiring its rival, Atlanta-based Axiall Corp.,  in a $2.3 billion cash deal, or $3.8 billion including the acquisition of debt. The deal, which was announced in June, is expected to close by the end of the year.

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