30 November 2010 17:34 [Source: ICIS news]
By Nigel Davis
Dominated by competitive, low-cost producers in the Middle East and
Even prior to the downturn it was widely apparent that for the largest and most diversified European and North American players, something would have to give.
Mature markets demand an approach that focuses on applications, costs and ultimately on more efficient ownership structures.
The downturn scuppered the
BASF will also keep the styrene monomer and PS capacities used to produce foam that it has in
Greater efficiencies and reduced costs can be expected from the 50:50 joint venture, the companies say, so streamlining and plant closures are probably on the cards. They will want to get operating rates up, which for styrene have been hovering globally at around 82%.
BASF is putting businesses into the joint venture with sales of around €3bn ($4bn), and INEOS operations with sales of some €2bn, joint ventures included. Further financial details, including the amount INEOS will pay to BASF to complete the deal, have not been revealed.
BASF’s Styrolution spin-off will go ahead as planned. When INEOS completes its acquisition of the 50:50 INEOS Nova venture, it will be folded into the new company. The new Styrolution could be established in mid-2011 or when given the go-ahead by anti-trust authorities.
There is some customer concern in ABS, where the number of producers in
Most of its sales would be made in Europe, although in 2009 the
One thing the merger might achieve is a more dynamic organisation, and one that is possibly more entrepreneurial.
“The joint venture will deliver new opportunities for innovation and growth," INEOS Capital chairman Jim Ratcliffe said.
“The world-scale assets will secure a sustainable and competitive business that is capable of meeting the long-term needs of a rapidly changing market,” he added.
Styrolution will need to demonstrate all of that. Consolidation in styrenics is likely to prove to be key to survival in a fast-changing world in which the business dynamic is increasingly driven by
Globally, the going is likely to prove to be tough for styrenics. Slow demand growth in Europe and North America will contrast sharply with the dynamic in
Next year, for instance,
Styrolution will be a global player, with BASF and INEOS contributing complementary products and technology.
($1 = €0.76)
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