FocusStyrolution implications concern Europe ABS players

01 December 2010 18:03  [Source: ICIS news]

LONDON (ICIS)--The Styrolution joint venture (JV) between BASF and INEOS will just hand more power to an already-small pool of producers, European acrylonitrile-butadiene styrene (ABS) consumers said on Wednesday.

Buyers complained that there were only four main ABS manufacturers in western Europe as it was, with INEOS and BASF the largest, and if the plan were to go through their combined capacities would be close to 60% of the domestic market.

The 50:50 JV would combine not just ABS, but global business activity in styrene monomers, polystyrene and other styrene-based copolymers. However, its establishment was still subject to approval by the appropriate antitrust authorities. The two companies hope to implement the venture in late 2011.

However, ABS players were not so sure this would happen. One customer said: “I’ll be surprised if the competition authorities don’t have something to say about this.”

BASF has two ABS plants in Europe, a 200,000 tonne/year unit in Antwerp, Belgium, and an 80,000 tonne/year site in Ludwigshafen, Germany, according to the ICIS Plants and Projects Database.

INEOS runs a 130,000 tonne/year plant in Tarragona, Spain, and also operates a facility in Cologne, Germany.

Their main competition in the region would be Styron’s 200,000 tonne/year site at Terneuzen in the Netherlands, and Polimeri’s 55,000 tonne/year production facility in Mantova, Italy.

BASF says that with worldwide ABS capacity reaching 6m tonnes, consumers had little to worry about should the JV be approved.

“ABS is a global market and there is enough production worldwide to ensure there is enough competition,” BASF spokesman Michael Grabicki said.

However, European players said that competitive imports from Asia had been lacking all year, a trend which was likely to continue into 2011 given strong ABS demand in the region and a lack of confidence in the euro.

These factors had already contributed to ABS compounding grade prices rising from €1,450-1,480/tonne ($1,883-1,922/tonne) to €1,790-1,840/tonne since January, according to ICIS.

“I buy from both [BASF and INEOS] and can see no good coming from this at all… It’ll be good for the producers because it means higher prices and more control over the market for them,” one buyer said.

Other suppliers were more measured in their views, and while they also expressed apprehension about the JV, there were also questions over the business direction Styrolution would take with regards to ABS.

INEOS tended to concentrate more on coloured, performance and specialty grades, targeted more towards the high end of the market, while BASF focused more on the extrusion and commodity sectors, players said.

“It will be interesting to see what happens, as they run two different product lines. We will have to see how they integrate and what strategy they take,” a seller said.

For now, observers were waiting on the verdict of competition regulators before speculating too much on the consequences of Styrolution.

($1 = €0.77)

For more on ABS visit ICIS chemical intelligence
For more on BASF and INEOS visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Amandeep Parmar
+44 208 652 3214

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