Petrochemicals: aromatics reaction to Marl, Germany, closure

02 April 2012 00:00  [Source: ICB]

European aromatics players have reacted with a mixture of resignation and anxiety to the announcement that Swiss-headquartered INEOS Styrenics will close its polystyrene (PS) and styrene monomer (SM) units in Marl, Germany, at the end of the year.

Man on phone, Rex Features

 © Rex Features

Rationalization in European sytrenics makes it tough for players

INEOS Styrenics announced on March 20 that it will close the plants following news that Germany-headquartered Styrolution will no longer take SM and PS from the joint-venture facilities.

"It is with great regret that I have to announce the closure of the polystyrene and styrene units at Marl, but I am pleased to confirm that all staff affected by this decision will be offered alternative roles within INEOS Group or Styrolution," said Gerd Franken, CEO of INEOS Styrenics.

Styrolution was created in October 2011 by the merger of some of the styrenics operations of Germany's BASF and INEOS. The plants produce 180,000 tonnes/year PS and 350,000 tonnes/year SM. The European styrenics sector has faced the challenge of volume loss in key end-use markets, as well as pressure from newer supply sources in the Middle East and Asia for several years.

Following the emergence of several joint ventures in Europe, plant closures and operational streamlining had been predicted by sources, as companies strived to remain competitive.

INDUSTRY REACTS

There has been strong reaction to the news among Europe's SM players who are now considering the potential effect of the closure. "It's certainly going to make the market a bit livelier," said one trader. With the additional PS capacities in the Middle East now, this will make it very tough for European players," another said.

Others remain unsure of how this will affect supply-demand balances, as removing the SM capacity is counterbalanced by the PS closure. It was estimated that the units have been operating at 75% of capacity, meaning that the volume of SM actually being taken out of the market by 2013 would be much lower.

One trader estimated it would be closer to 150,000 tonnes/year. "One or two imports from the US each month would cover the shortfall," it said.

There was also speculation that there may be more streamlining in European styrenics on the horizon.


By: Truong Mellor
+44 208 652 3214



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