Europe IPA players offer mixed views on Sasol's consolidation move

08 November 2013 19:28  [Source: ICIS news]

LONDON (ICIS)--Market participants on Friday offered mixed views on Sasol's announcement this week that it will mothball an isopropanol (IPA) plant in Germany, with some traders saying the move will not affect supply or prices, while another source warned that up to 50,000 tonnes/year of IPA capacity could be taken off the market.

The South Africa-headquartered chemical firm said on Monday that its IPA plant in Herne, Germany, is expected to close by the second quarter of 2014. Sasol’s German IPA production will then be consolidated at its larger manufacturing unit in Moers.

ICIS data show that the Herne plant has a capacity of 85,000 tonnes/year, while the Moers plant has a capacity of 155,000 tonnes/year.

A Sasol spokesman confirmed that the company has a total capacity of 240,000 tonnes/year but did not clarify whether the figure will remain the same after the shutdown of the Herne plant.

However, the spokesman said: “The planned mothballing of our Herne IPA plant will not impact our ability to supply our current and expected future demand.”

The company has said that the measure is part of a larger initiative to improve the economic performance of its German solvents business in response to an “increasingly challenging” feedstock environment and weak demand for its products. 

Some IPA traders and buyers said Sasol's plan to consolidate production from two plants to one will save the company on costs. This is also not expected to have any major impact on the supply and price of IPA, they said.

“There’s already enough capacity in their Moers plant,” a trader said. “Even if there’s a lack of material [from Sasol], others producers can bring in more.”

Novapex, another IPA producer, is boosting its production capacity at its plant in Roussillon, France, by 10,000 tonnes/year over the next year to reach a total capacity of 60,000 tonnes/year.

Another 30,000 tonnes/year of capacity may be added after 2016 if demand continues to grow, a Novapex source has said previously.

Other market sources said Sasol’s IPA consolidation could have some downside effects on the market.

“For IPA, [Sasol] will surely try to switch some production volumes to Moers but I doubt all, so the change will likely take around 40,000-50,000 tonnes of capacity out,” a source said.

Another source said closing one plant means that Sasol will no longer have a back-up plant if the other plant has production problems.


By: Vladimir Guevarra
+44 208 652 3214



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