US SABIC alliance with Ashland could shake market - sources

24 March 2009 22:55  [Source: ICIS news]

By Ben Lefebvre

HOUSTON (ICIS news)--Major US plastics producer SABIC Innovative Plastics is set to use Ashland Distribution to sell its products in North America, a move that could squeeze the sales of its competitors, sources said on Tuesday.

SABIC formerly used its in-house sales team to market its own material. The move to Ashland is another shake-up for the Pittsfield, Massachusetts-based plastics maker, which is in the process of cutting its 9,500-person workforce by 10%.

Ken Gordon, spokesman for the Dublin, Ohio-based Ashland, said he expected the agreement to take effect in mid-April, but declined to say how much the deal was worth to Ashland. The company already sells polycarbonate (PC), acrylonitrile-butadiene-styrene (ABS) and other resins from SABIC’s smaller competitors, INEOS and Bayer.

Gordon said “decisions had yet to be made” whether those companies would stick with Ashland after SABIC’s move.

Spokesmen for SABIC Innovative Plastics and INEOS did not immediately reply to calls for comment.

A US resins compounder said INEOS and Bayer would probably find the presence of SABIC plastics in the Ashland portfolio a tough fit.

“The largest ABS producer in the US is teaming up with the largest distributor in the US. It’s going to be a bloodbath. Anything that SABIC makes, Ashland might not sell from other sources now,” the compounder said.

Bayer released a statement saying, “Bayer MaterialScience has many channels through which to market, and we review our market strategy on a regular basis.” A company spokesman declined to elaborate.

SABIC has a combined PC production capacity of 510,000 tonnes/year at its plants in Burkeville, Alabama and Mount Vernon, Indiana, more than twice that of Bayer’s PC plant in Baytown, Texas.

SABIC also operates three US ABS plants with a combined capacity of 415,000 tonnes/year. INEOS’s Addyston ABS plant in Ohio has capacity of 160,000 tonnes/year, while BASF operates a 130,000 tonnes/year plant in Altamira, Mexico.

SABIC Innovative Plastics was created after Saudi Arabian petrochemical giant SABIC bought GE Plastics for $11.6bn (€8.5bn) in 2007.

Ashland Distribution is a subsidiary of global specialty chemical maker Ashland Inc. The company reported net income of $167m in 2008, down from $230m the year before.

($1 = €0.73)

For more information on PC and ABS, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect


By: Ben Lefebvre
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