BP to Close Its Wilton PE Plant

27 August 2001 00:00  [Source: ICB Americas]

BP, one of Europe's largest polyethylene producers, is closing a 100,000-metric-ton-per-year low-density polyethylene plant at Wilton, Teesside, England, which is equivalent to onefifth of its European LDPE capacity.

The LDPE market in Europe has been badly affected by the current downturn in the polymers sector, which has driven down prices at a time of high raw material costs. At the same time, there has been an increase in LDPE capacity in the region.

"In a highly competitive market, it has been increasingly difficult to maintain profitability at the plant," says Donald Austin, BP's site manager at Wilton. "The plant's age and related high costs of production and maintenance, combined with competition from newer, larger plants have made Wilton unprofitable and led to this decision."

The company stresses that the plant, which will be shut down in October, would have been closed irrespective of market conditions. "We have tried all sorts of options for increasing productivity, but there is limited scope for reducing costs through integration at Wilton," says a BP spokesman.

BP has 350,000 tons per year of LDPE capacity at Erdoelchemie, Cologne, Germany, the petrochemicals complex where it recently acquired 100 percent control.

The company is expected to make arrangements with another LDPE producer, thought to be Basell, to maintain supplies to its customers. Basell recently brought on a 320,000-ton-per-year LDPE plant at Aubette, southern France.

In the face of weak demand, Basell announced this month that it is cutting back LDPE production at Aubette and Wesseling, Germany.

"We've been disappointed by the current state of the LDPE market in Europe," says a Basell spokesman. "But we still believe in the prospects for long-term growth in LDPE. At the moment, supply and demand are out of kilter."

The closure of the 28-year-old Wilton plant, which BP acquired from ICI in 1982, will mean that BP will no longer have a presence at one of the UK's largest chemical complexes. Two years ago, it sold to Huntsman a 20 percent stake in an 860,000-ton-per-year ethylene cracker at Wilton.

BP is also reducing activities at Baglan Bay, Wales, so that its UK chemical operations can be concentrated at its sites in Grangemouth, Scotland, and at Hull, northeast England. "We are focusing on large integrated sites," says the spokesman.

Meanwhile, BP has entered into a swap deal with Clariant under which it is taking over Clariant's Germany-based butyl glycol ether business while Clariant is acquiring BP's France-based brake fluids operation. No manufacturing facilities or staff will be transferred between the two companies.

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