Poland's Zachem halts TDI production following Ciech/BASF deal

09 January 2013 18:04  [Source: ICIS news]

LONDON (ICIS)--Ciech’s subsidiary Zachemhas stopped producing toluene di-isocyanate (TDI) at its facility at Bydgoszcz, Poland and is no longer active in the European TDI market, a company source said on Wednesday.

The 75,000 tonne/year TDI unit in Poland ceased production in the second half of December 2012. The plant closure is thought to have resulted from the recently announced deal between Ciech for the sale of Zachem’s TDI business to TDI producer BASF.

The deal includes intangibles linked to TDI production, including client lists, trade agreements and intellectual rights and know-how related to TDI technology.

This transaction meant that Zachem had to cease TDI production because of a non-competition obligation embedded in the deal.

The deal is subject to regulatory approval and there is some expectation that the deal is likely to be finalised in early 2013.

BASF was unavailable for immediate comment and there was no official response from Ciech.

Ciech’s sale of its Zachem TDI business stemmed from poor economics in this sector.

TDI market players said that supply in Europe remained good, despite Zachem’s plant closure, because it coincided with a quieter demand period over the Christmas and New Year period.

Buyers remain unfazed by the Zachem plant closure, stating that Zachem was only a small player in the European TDI market and adding that BASF was expected to supply any previous Zachem TDI customers.

They added that other TDI players were expected to sufficiently cover the plant closure, particularly as demand remain stable – albeit at the low level seen in the fourth quarter of 2012 –because ongoing economic uncertainty was continuing to dampen downstream demand from the bedding and furniture sectors, which are heavily dependent on consumer confidence and spending.

By: Heidi Finch
+44 20 8652 3214

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