Lori Ryerkerk: Look, I think you have said it best in terms of optionality. We actually started that project just on credit, and it was justified based just on additional methanol for use in Clear Lake and really the cost advantage of make versus buy for methanol on an average basis. So that was the justification for the project. Since the time we started the project, obviously, markets have continued to develop for more sustainable products for lower carbon footprint products. And we do believe for certain that there will be a premium that will be available for more sustainable products. I would say not so much, I don’t anticipate we will be in the biomethanol market. Our intent is to take that methanol and further convert it into lower carbon downstream derivatives.
So they lower carbon – acetic acid, lower carbon BAM or carbon BAE, lower carbon, palm and other polymers. And that is really where we think the advantage is as end users will see more value in being able to have low carbon. So think of it simply as be able to, through this project, put CO2 in the paint on your wall, that would otherwise would’ve been into the atmosphere. I mean, that is where we see the premium coming is from people who want to have that impact on their environmental footprint.
Operator: Next question is coming from Jaideep Pandya from On Field Research. Your line is now live.
Jaideep Pandya: The first question is really on the nylon chain. There is a lot of upstream capacity in monomers and polymers coming in Asia. So could you just tell us like maybe on a fundamental basis, how do you add value in your nylon sort of portfolio? And in the long run, why would you actually want to be more in the polymerization. Why wouldn’t you want to be more downstream asset-light use this capacity that is coming in Asia and create more product differentiation. That is my first question. And then on the Acetyl side, there is capacity, again coming in China, some of the plants have been laid this year and ramping into next year. So how do you see demand supply balance in acid and VAM next year?
Lori Ryerkerk: Thanks for the question. As I said earlier, we do see the polymerization capacity and some intermediate capacity coming on stream in China. We have seen some other industry shutdowns going on. But we remain really excited about PA66. Again, a lot of what’s coming on is polymer. A lot of the value is adding in compounding. A lot of our PA66 goes into highly differentiated products, where we are the sole suppliers. And we see a lot of future potential for PA66 in EV, for example, uniquely to EVs lately, we have had applications for battery cell frames and in-place, high-voltage connector, brackets and mounts for electric motors. So we see the EVs continuing to extend to the extent that we see some moderation in EV production.
We think that will be in favor of hybrids and hybrids have even more PA66 content. So that is only a good thing for us. And then if you look at the next five-years, we also see electricity demand more than doubling, partly driven by EVs, but also driven by the electrification of everything. And there will be a strong pull on PA66 for that in building out electrical infrastructure. But again, you don’t tend to be integrate materials. These tend to be highly differentiated. They need fire retardants, they need all sorts of different things. And that is where we really see the value being added is in the differentiation achieved through compounding. And look, we always want the flexibility to make versus buy because we do see these markets swing because of outages and other things going on.
So this is really about building more optionality into this chain in a way that M&M didn’t have because they had a very cumbersome take-or-pay. They have a lot of overcapacity, they had single sourcing. We have been systematically resolving these issues so that we will have a flexible and highly optional PA66 chain where we think we can achieve significant value uplift.
Brandon Ayache: Kevin, we will take the next question is our last one, please.
Operator: Our final question today is coming from John Roberts from Mizuho. Your line is now live.
John Roberts: After the start-up of Clear Lake BAM in early 2024, do you have the option of permanently closing the VAM unit in Frankfurt or you need to maintain some optionality and flexibility by only doing temporary closures. And excluding any onetime upfront cost, is there a significant cost difference between a permanent closure in operating Frankfurt and the stop and start mode?
Scott Richardson: Yes, John, we are building a new acetic acid plant in Clear Lake on a BAM unit. So we did the expansion in Clear Lake and BAM a number of years ago. So we feel really good about our current network in BAM.
John Roberts: And do you think the prolonged Delrin divestment process contributed to some of the weakness in the Engineered Materials market?
Lori Ryerkerk: Yes. Hard to say, but I don’t – we haven’t really seen that that has been an impact at all in terms of impacting the pulp market.
Operator: We have reached the end of our question-and-answer session. I would like to turn the floor back over to Brandon for any further closing comments.
Brandon Ayache: Thank you, Kevin. We’d like to thank everyone for listening in today. As always, we are around for any follow-up questions that you have. Kevin, please go ahead and close the call.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
