INEOS to shut 236,000 tonnes Texas PP capacity

10 November 2008 15:13  [Source: ICIS news]

LONDON (ICIS news)--INEOS Olefins & Polymers USA will close a significant proportion of its North American polypropylene (PP) capacity, the company said on Monday.

Two PP bulk phase units at the Battleground Manufacturing Complex in La Porte, Texas will be shut down by early 2009, to strengthen the competitiveness of its US PP assets, INEOS said in a press statement.

The closure represents approximately 520m lbs/year (236,000 tonnes/year) of homopolymer and random copolymer capacity.  INEOS Olefins & Polymers USA said it produces 2.8bn lbs/year of PP a year making it the second largest producer in the US.

One of the two lines at La Porte will close by the end of 2008; the other line will close at the end of January 2009 and the majority of grades translated to other INEOS polypropylene assets, the company said.

“INEOS remains committed to delivering quality products that meet our customers’ needs, and we believe that our decision clearly demonstrates our intent to optimise our asset base and assure a robust polypropylene business consistent with the overall strategies of Olefins & Polymers USA”, said Dennis Seith, CEO of the INEOS’ Olefins & Polymers USA business.

US PP contract prices were headed for a large drop in November on the back of weak demand and lower feedstock costs, sources said during the week ended 7 November. October resin prices were down by 20 cents/lb ($441/tonne) or more, and November contract decreases were likely to be in the range of 25-30 cents/lb, buyers said.

Falling PP spot prices in the past two weeks and initial monomer settlements at minus 30 cents/lb for November were driving market sentiment, buyers said.

To avoid exposure to freefalling market prices, buyers were operating on minimal inventories, and this exacerbated an already sluggish demand picture. Some producers were throttling back production significantly to cope.

 

Flint Hills Resources said it would permanently close its Odessa site in Texas, which includes 100,000 tonnes/year PP capacity. The closure was scheduled for the first half of 2009, but production could be halted sooner depending on sales, sources said.

 

Pinnacle Polymers shut down its 410,000 tonne/year plant for a week recently, but it was unknown if the facility was restarted.

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By: Nigel Davis
+44 20 8652 3214

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