FocusQuinn's €200m Leuna MMA to start mid 2009

15 January 2008 17:21  [Source: ICIS news]

LONDON (ICIS news)--Quinn Chemicals hopes a €200m investment in upstream production will help ensure the future of polymethyl methacrylate (PMMA) production for both the privately owned company and its customers, a spokesman said on Monday.

Speaking to ICIS news on the construction of Quinn’s new methyl methacrylate (MMA) plant, due to come on-stream in Leuna, Germany, in mid 2009, the spokesman said that the development had been born of necessity.

"There is now very little room for an independent player in the European PMMA market," he explained. 

"We feel that it will be increasingly difficult to operate as a smaller player on the fringes in the future, hence the decision to ensure our future through the development of this plant."

The spokesman said that the multi-million euro development, which had initially been budgeted at €150m but would now cost in excess of €200m, would prove more reliable than current production facilities within the region.

During 2007, a number of outages at major plants across Europe had seen supply tighten considerably, with year-on-year contracts rising some €60/tonne as a result against a feedstock methanol drop from quarter four 2006 to quarter four 2007 of €15/tonne.

This tightness had since dissipated, although first quarter 2008 contract nominations have been made for increases of €50-75/tonne.

The 100,000 tonne/year plant, at Leuna, Germany, will be the first in Europe based on new tertiary butyl alcohol (TBA) technology.

"There hasn’t been a new plant [in Europe] for a long time. The existing plants all operate on an older technology and have been proven to be unreliable. One of the big issues in the European MMA and downstream markets is the unreliability of supply."

Although the plant was primarily intended for internal supply to Quinn’s two PMMA plants, a nameplate 40,000 tonne/year unit at Mainz, Germany, and 10,000 tonnes at Zilina, Slovakia, there would be some surplus which would be made available to the open market, the spokesman agreed.

With analysts predicting global oversupply of MMA by 2009, was Quinn group concerned that this new supply in addition to the vacuum caused by its captive use, could loosen the market?

"We will have a surplus of material available for sale into the market" replied the spokesman. "However the main focus is on internal supply and demand. The potential surplus of MMA is not something that concerns us. We are primarily focused on the development of our own downstream businesses."

Much speculation has been given over to the licensed technology, the source of which Quinn will not disclose. Players in the European MMA market had said that they felt that with such a relatively new technology could be difficult to maintain effectively high operating rates.

The Quinn spokesman, however, thought that, if anything, the new technology would be far more effective than that in use across the continent. "We believe that over a seven year cycle the economics of our plant will be superior to those of a traditional technology MMA plant," he said.

Securing regular TBA supply had been crucial to the plant’s development, as the product was less readily available than traditional MMA feedstocks, as it is either a co-product incidental to propylene oxide production, or made by direct hydration of isobutylene.

An accord signed with Lyondell Chemie in November of 2007 had assured the near-term future of the plant, however, with regular TBA supply coming from the European major’s production facility at Botlek, Rotterdam, in the Netherlands.

As talk of recession in the US and Europe mounts, PMMA market players have discussed a potential drop off PMMA end-product markets, such as construction and consumer electronics.

"Quinn group is a privately owned company and the group takes a long view of businesses and cycles," said the spokesman. 

"Demand will fluctuate certainly, but the MMA plant will further consolidate the future of the Quinn Plastics in Europe and will allow us to be a good support to our customers.

"The plant was initially planned to go into operation in early 2008. In 2006, the project was put on hold to allow a detailed value engineering review," he added. This review had also meant the plant was to come on-stream a year later than was initially announced, the first quarter of 2008.

According to company literature, Quinn is Europe’s foremost supplier of transparent plastic sheet products, and produces plastics from both styrene and acrylic routes.

Other PMMA producers in Europe include Lucite and Arkema’s Altuglas which is in the process of purchasing Repsol YPF’s PMMA businesses in Europe. This purchase would leave three vertically integrated players in the European market, as both Lucite and Arkema have their own MMA production facilities.

Contacts at the producers would not comment on the record on the reliability of their various process technologies. A source close to one diplomatically said that "each of these processes has a different challenge".

Another source not directly related to the producers said that only time would tell how reliable or effective the TBA route proved.

By: Peter Salisbury
+44 20 8652 3214

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