Indorama Ventures and Partners Temporarily Halt Corpus Christi Project Amidst Soaring Costs

Indorama Ventures Public Company Limited (IVL), a prominent global sustainable chemical producer, along with its joint venture partners Alpek and Far Eastern New Century (FENC), are facing significant cost overruns in their Corpus Christi Polymers (CCP) project in Texas. Earlier this week, they temporarily stopped construction at their integrated (Purified Terephthalic Acid) PTA-PET (Polyethylene Terephthalate) plant in Corpus Christi, Texas. This move comes as the Corpus Christi project becomes the fourth chemical project to encounter substantial budgetary challenges this year. The decision to pause construction is primarily driven by the prevailing challenging business environment characterized by rising costs, elevated interest rates, and a severe shortage of skilled professionals, leading to a notable increase in labor expenses.

The company was supposed to have an annual PET production capacity of 1.1 million tons. A second production facility will have a 1.3-million-ton annual capacity for purified terephthalic acid (PTA).

With the fastest increase in two decades, rising construction salaries have contributed to escalating project costs. The chief economist for the Associated General Contractors of America (AGC) highlights the unprecedented rise in construction salaries. In addition to labor costs, the surge in United States manufacturing projects has increased demand for construction labor and materials, further exacerbating the cost challenges faced by projects such as the Corpus Christi plant (CCP).

The pause in construction is part of a strategic effort by IVL and its joint venture partners to effectively manage cost inflation and evaluate options to prioritize efficiently or phase project completion. The goal is to maximize the utilization of invested capital while minimizing excess expenditures. Despite the current setbacks, the partners remain committed to providing their customers with an efficient and competitive supply solution.

While the exact financial impact of the cost overruns on the Corpus Christi project (CCP) remains undisclosed, the decision to halt construction underscores the broader challenges facing the chemical industry. These challenges include inflation, high construction and labor costs, shortages of building materials, and surging diesel prices, which have risen at the sharpest rate. Additionally, recent tariffs imposed by the United States on steel and other materials have elevated price levels for these essential construction components.

In the interim, Indorama Ventures will maintain its commitment to meet consumer demand by leveraging its extensive local and overseas capabilities network. The company and its joint venture partners will also continue to assess options to optimize the Corpus Christi project (CCP), preserving and maintaining assets in preparation for the eventual resumption of construction