07 January 2009 08:22 [Source: ICIS news]
Correction: In the ICIS news story headlined "LyondellBasell bankruptcy spooks Asian petchems" dated 7 January 2009, please read in the fifth paragraph ...a merger deal announced in July 2007... instead of ...a merger deal in July 2008.... A corrected story follows.
By Chow Bee Lin
SINGAPORE (ICIS news)--LyondellBasell's bankruptcy protection move has raised fears over the global petrochemicals sector but there has been no immediate impact on the chemical giant's operations in ?xml:namespace>
The Netherland-based major filed for Chapter 11 protection in the
“The first quarter of this year is a tough period for petrochemical companies. If they cannot survive this period, they’ll go bankrupt. So, I think we should pay more attention to the market in Q1,” Arden Dai, an analyst with consultant Frost & Sullivan China said in Mandarin.
The sharp fall in petrochemical prices in the fourth quarter last year as the global financial crisis raged, was a major blow to all petrochemical companies.
LyondellBasell’s financial predicament was aggravated because of a merger deal announced in July 2007, in which Basell paid out a hefty sum to acquire US Lyondell’s assets, two polyproplyene (PP) producers in
The $19bn (€14bn) acquisition was partly funded by debt.
Many petrochemical companies’ dicey financial positions exacerbated due to the credit crunch and production costs ballooned when declines in upstream feedstocks such as naphtha and crude lagged behind that of downstream petrochemicals, the first PP producer said.
“Naphtha feedstock in
Most PP traders and producers in Asia said it was too early to say how LyondellBasell’s financial troubles in the US would affect the PP market dynamics in Asia, but the second PP producer said he was concerned that LyondellBasell could cut monomer production in the US because of the credit crunch and push up monomer prices in the US and Asia.
US monomer prices are widely used as a component in monomer contract pricing in
However, some PP producers said they believed that due to LyondellBasell’s brand name, technology, expertise and market shares, its distressed polyolefins and olefins assets would attract a lot of potential buyers but for the current gloomy economic and financial climate.
“The timing is not good,” the first PP producer said.
LyondellBasell is described as the world's largest independent producer of polypropylene and advanced polyolefins products. It is also a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales.
The bankruptcy filing has not affected the company’s supply line and customers nor hampered its production in Asia, a LyondellBasell employee in
“I don’t think we’ll see drastic implications in
“We’re awaiting further instructions from our
“Until now, we have not received any bankruptcy information from the company and the supply of cargoes is still normal,” said a China-based trader who buys polypropylene (PP) from LyondellBasell.
Business was also described as normal at Polymirae, a 50-50 joint venture between LyondellBasell and Daelim Industrial of
“It has nothing to do with Polymirae. Our operations are running as usual,” said a senior official at Polymirae.
A spokesman at
($1 = €0.74)
Helen Lee, Hong Chou Hui and Judith Wang contributed to this story
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