Europe HIPS supply to be hit by outage at Styron Belgian plant

23 March 2012 16:09  [Source: ICIS news]

LONDON (ICIS)--Global styrenics major Styron has suffered a serious mechanical breakdown at its Tessenderlo plant in Belgium. Martin Whelan, the US-based company’s global product director for styrenics, disclosed today that the problem occurred on Sunday, 18 March, when a motor in a reactor stopped the output of high impact polystyrene (HIPS) from one of its production trains.

Whelan said operatives at the plant had been able to take the unit down safely and began the inspection of the train on Wednesday. He believed that the facility would probably be out of commission for up to three weeks, so Styron had therefore decided to divert some general purpose polystyrene (GPPS) production at a swing plant in Schkopau, Germany, to compensate for the prospective loss of Belgian HIPS volumes. No details of capacity figures were available before publication.

Despite the company’s measures to counteract the shortfall in HIPS, Whelan asserted that Styron had stopped new orders for the remainder of this month and that the outage would result in “quite a severe allocation” of material to customers throughout April. He added that it would be “extremely short on HIPS” going into May, especially as “demand out there [for HIPS] has been high”.

Whelan told ICIS: “If I had a choice where there had to be a shutdown of production, it wouldn’t be HIPS.”

He observed that, while the direct impact of the outage would most evidently be felt in HIPS, GPPS production would also be curtailed because of the need to divert production at the Schkopau plant.

European PS producers have been endeavouring to increase the premium over GPPS paid by consumers for HIPS since the middle of last year because of the steeply rising costs of polybutadiene rubber, used in the manufacture of HIPS. This, in turn, has arisen from a massive increase in the price of its precursor, butadiene (BD). The contract price for BD has risen from €1,700/tonne ($2,237/tonne) FD to €2,185/tonne FD since the beginning of 2012, and producers are targeting another increase in April.

Whelan agreed that Styron’s production problem was likely to tighten the market for HIPS, and could place further upward pressure on the price: “There will probably be a scramble to get HIPS.”

($1 = €0.76)

Read Paul Hodges’ Chemicals and the Economy blog

By: Peter Gerrard
+44 208 652 3214

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