NOVA delays Canadian PE expansion

02 December 2008 21:03  [Source: ICIS news]

HOUSTON (ICIS news)--NOVA Chemicals will delay an expansion of its eastern Canada polyethylene (PE) assets by 12-18 months as part of an initiative to strengthen its balance sheet in 2009, a company official said on Tuesday.

“The industry is experiencing a feedstock cost correction of historic proportions,” said company president and chief operating officer Chris Pappas in a presentation to investors.

He said fourth-quarter orders were expected to be down by 20-25% from the third quarter as customers retreated from the free-falling PE market.

Delaying the 250m lb/year (113,000 tonne/year) PE expansion at two plants in Ontario will save the company $60m (€47m) in 2009, Pappas said.

NOVA identified $410m in potential cash savings in 2009 versus 2008, including a $150m improvement in operating costs that would be realised if the Canadian dollar remains at 0.80 versus the US dollar on average.

The Canadian dollar was closely matched with its US counterpart during the first half of 2008, but began to weaken during the second half as oil prices fell.

Pappas said that despite the weak economy, PE consumption was still “reasonable”.

He cited the re-opening export window to China in late November and December as a promising development for fourth-quarter sales, noting that prices in China have climbed by 3 cents/lb this month.

($1 = €0.79)

For more on NOVA’s polyethylene plants, visit ICIS plants and projects
For more on polyethylene visit ICIS chemical intelligence

By: David Barry
+1 713 525 2653

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