INEOS NOVA plans to close Netherlands PS plant

17 September 2009 11:12  [Source: ICIS news]

INEOSLONDON (ICIS news)--INEOS NOVA has announced its intention to close permanently its 90,000 tonne/year polystyrene (PS) plant at Breda in the Netherlands, Pierre Minguet, the company’s business director of PS, said on Thursday.

Customers would be served from the company’s other PS lines in France, Sweden and Germany, he added. Expandable polystyrene (EPS) and high performance PS would still be produced at Breda.

“We remain completely committed to PS,” said Minguet, “but contribution margins are very low.”

The site currently employs 50 people.

"We recognise the impact of such a decision and will work hard to make this transition as smooth as possible for our employees and the Breda community," said Martin Pugh, managing director of INEOS NOVA, in a statement.

The Breda works council and unions had been informed and consultations on the social consequences for the affected employees had started.

This latest plan to shut down PS capacity in Europe came after several other announcements this year that had left the PS industry down by an estimated 10% of installed capacity.

The PS industry had been suffering from oversupply, even after 13% of installed capacity was brought down in 2006.

Weak margins had led to the closure of Dow’s 65,000 tonne/year Bilbao, Spain, PS plant in quarter three along with its 50,000 tonne/year plant at Terneuzen in the Netherlands.

BASF had closed 25% of its PS capacity in Ludwigshafen, Germany - estimated to be around 80,000 tonnes/year - and Total Petrochemicals had also announced its intention to close some PS capacity in France in 2009. The exact amount had not been made public.

PS producers had been complaining of unsustainable margins for several years.

Prices had been following upstream styrene closely for many months, and in September had dropped by around €40/tonne after the monthly styrene contract settled down by €84/tonne.

General purpose PS (GPPS) net prices at medium-sized accounts were trading around €1,000/tonne FD (free delivered) NWE (northwest Europe).

The oversupply problem in the PS industry was not restricted to Europe. On 15 September BASF announced its intention to sell its 190,000 tonne/year PS plant in Brazil.

Demand had been dwindling in many sectors as technological advances left PS volumes weak. A couple of PS sellers reported August volumes at a record low in Europe.

PS producers in Europe include BASF, Dow Chemical, INEOS NOVA, Polimeri Europa and Total Petrochemicals.

($1 = €0.68)

For more on polystyrene visit ICIS chemical intelligence
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By: Linda Naylor
+44 20 8652 3214

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