16 May 2012 16:59 [Source: ICIS news]
LONDON (ICIS)--Industrie Generali will produce "a few thousand tonnes of PVC in June" at its former Vinyls Italia polyvinyl chloride (PVC) facility in Ravenna, northeast Italy, after production tests this month proved successful, CEO Roberto Castiglioni said on Wednesday.
The plastics distributor and producer will reach production levels of 150,000-200,000 tonnes/year within two years, Castiglioni said in an interview with ICIS. He estimated Italian PVC market demand to be 850,000-900,000 tonnes/year.
Industrie Generali will only start to break even on its PVC activities at production levels of more than 100,000 tonnes a year, he said.
"The first tests have been carried out successfully, and we have produced the first kilos of PVC," Castiglioni said. "We expect to fire up the plant and reach quite significant levels of production by June."
The former Vinyls Italia plant has 21 reactors and a nominal production capacity of 140,000 tonnes/year of high-grade PVC.
Industrie Generali purchased the plant when the business was in bankruptcy proceedings in 2010, beating rival offers by Switzerland's Gita and Croatia's Dioki. It agreed with the local government to maintain operations. The plant has 54 employees.
"Clearly, if we only thought to be active until 2015, we would never have done this," Castiglioni said. "We are looking at a 2030, 2050 horizon: the hope is that even when I am no longer here, the business will continue."
Production was initially expected to resume in March this year and later postponed to April and further due to production constraints at feedstock vinyl chloride monomer (VCM) suppliers. Its main suppliers prior to the production halt some three years ago were France's Arkema and Croatia's debt-ridden Dioki.
"France remains our preferential supplier, and obviously we're looking at Croatia as well, as long as they resume production," Castiglioni said.
"We expect they will, and are waiting for the official announcement. The location helps us as it's very easy to cross the Adriatic."
The Croatian government in March arranged a debt-to-equity restructuring deal to save the Dioki Group from bankruptcy and ensure workers received wages for unpaid work.
Its owners had agreed to reduce their holding in the company to 1% so that creditors such state-owned electricity provider HEP, the gas division of Croatian group INA and state-held rail operator Hrvatske Zeljeznice could have debts converted into equity.
"We will also source out other supplies [of VCM] internationally, particularly on a spot basis," Castiglioni said. "The idea is to look for sourcing where it is more convenient."
There has been a dearth of PVC in recent months relative to existing demand, the CEO said, adding that market expectations were for 6%/year global growth.
Most of Industrie Generali's production will go to feed the Italian market, he added.
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