UpdateHuntsman closes unprofitable Australian styrenics facility

08 September 2009 13:58  [Source: ICIS news]

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LONDON (ICIS news)--Huntsman Corp is shutting its Australian styrenics base because the small operation cannot compete with products coming in from Asia, a spokesman for the US company said on Tuesday.

Huntsman is to cease styrenic operations at its West Footscray plant by the end of 2009, while the polystyrene and expandable polystyrene plants (EPS) will shut in early 2010.

The spokesman said this was Huntsman’s only styrene and expandable polystyrene plant in Australia and the quantities produced were not sufficient to make the operation feasible.

In 2008 the unit posted an EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) loss of $24m (€16.8m) and a $29m operating loss less impairment charges of $5m.

The spokesman added that the plant could not compete with the cheap products being imported from Asia, especially with the strong Australian dollar.

“Products produced at the site represent less than 2% of Huntsman’s 2008 global sales,” the company said in statement, adding that it was the last commodity polymer plant in its portfolio after it divested plants to NOVA in 1998, SABIC in 2006 and Flint Hills Resources in 2007.

“Huntsman's other operations in Australia, including its RMAX(R) expanded polystyrene business, performance products, polyurethanes, textile effects and advanced materials divisions, are not affected by the announcement and will continue to operate in Australia,” the company said.

The closure of the plant is expected to cost the company $25m in 2009, primarily due to severance pay, and a further $15m in 2010, it added.

The closure of the polystyrene plant follows several similar closures in Asia, which market sources said are a result of technological innovations in end-consumer products killing demand for the product.

China, a key market for polystyrene, has also seen a continuous downtrend in polystyrene demand from 2003, when demand peaked to more than 2.6m tonnes. It was down to 2.3m tonnes in 2008.

BASF, Idemitsu PS Malaysia and Dow Chemical have all shut down polystyrene plants in Asia, or entirely exited the region’s polystyrene market in the last year.

($1 = €0.70)

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By: Lucy Craymer
+44 20 8652 3214



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