15 September 2011 22:06 [Source: ICIS news]
HOUSTON (ICIS)--While it might create some short-term market tightness, the closure this year of Phillips Sumika's 365,000 tonne/year polypropylene (PP) plant will ultimately help stabilise the market, sources said on Thursday.
The closure of the Pasadena, Texas, plant, announced on Tuesday by Chevron Phillips Chemical, which operated the company as a joint venture with Sumika Polymers America, is expected to be completed by the end of the year.
Phillips Sumika's exit from the market will add 700m lb (318,000 tonnes) of propylene monomer back into the supply stream, one buyer said.
That influx of monomer could help ease some of the current supply struggles, the buyer added.
A producer agreed, saying that while there might initially be some market tightness as the company's customers search for new suppliers, eventually the lost production capacity will be quickly absorbed by other producers.
Weak domestic demand for PP has producers operating at about 82–83% capacity, one broker estimated.
"We don't need the pellets today," the broker said, referring to PP resin.
By adding propylene back into the market, the source suggested there will be a little more stability in the monomer supply situation.
"If you look at what has really killed the market, it hasn't been the price of polypropylene, it's been the price of propylene," the broker said. "Until we get our hands around how to control propylene monomer, it is going to continue to be a struggle."
One source suggested it might be a natural fit for Braskem to purchase the Phillips Sumika propylene supply for feedstock for the two PP plants it purchased from Dow Chemical in July.
With Phillips Sumika's exit from the market and Braskem's purchase of Dow's plants, that leaves nine major PP producers operating in North America.
Other major North American PP producers include LyondellBasell, ExxonMobil, INEOS, Total, Formosa, Pinnacle Polymers, ConocoPhillips, and Flint Hills Resources.
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