By: Frank Esposito
May 30, 2014
Styron LLC no longer will sell commodity grades of polycarbonate resin in North America.
Berwyn, Pa.-based Styron will end its PC supply agreement with Dow Chemical Co. in the fourth quarter of this year. Dow had produced PC for Styron on a contract basis at a plant in Freeport, Texas, since Styron was spun off from Dow and acquired by private equity firm Bain Capital in 2011.
Commodity PC grades — including those used in sheet, bulk extrusion and optical media — “tend to be lower-margin,” Styron spokeswoman Catherine Maxey said in a May 30 phone interview. So Styron will no longer serve those markets.
Styron will continue to market higher-margin compounds and blends that are toll-produced by PolyOne Corp. These materials are sold into medical devices, lighting, automotive and similar applications. PC used in those blends will be sourced from an unidentified third-party supplier and from a Styron PC plant in Stade, Germany, Maxey said.
“Our [compound and blends] customers won’t see any change, and no Styron jobs will be affected,” she added.
According to Maxey, Dow will discontinue PC production in Freeport, where Styron had been its sole customer. Dow will close and dismantle its PC unit there, she said. Officials with Dow in Midland, Mich., could not be reached for comment.
In a recent filing with the Securities and Exchange Commission, Styron officials said the firm would have saved $35 million in 2013 by ending its contract with Dow and altering some raw material contracts at its Stade plant.
Styron’s exit from the commodity PC market will leave Sabic Innovative Plastics and Bayer MaterialScience as North America’s only remaining regional producers of that material. BMS parent Bayer AG of Leverkusen, Germany, has been seeking a buyer for that unit, according to media reports.
Styron posted mixed results in the first quarter of 2014. Sales fell 2 percent to $1.36 billion, but the firm registered a $17.1 million profit after losing $9.7 million in the same quarter last year. In addition to engineered polymers, Styron’s products include styrenic resins, synthetic rubber and latex. The firm’s assets include a 50 percent stake in Americas Styrenics, a joint venture it operates with Chevron Phillips Chemical Co.
Styron also earlier this year filed for an initial public offering at an unspecified date. The firm hopes to raise as much as $200 million through the IPO. The firm had filed for an IPO in June 2011, but withdrew that filing in June 2013. After the IPO, Styron plans to operate as Trinseo SA.
Funds raised by the stock offering would be used to pay down debt, for working capital and for general corporate purposes, officials said in the filing. No stock exchange or target per-share price was listed in the filing.
Styron employs 2,100 worldwide and posted sales of just over $5.3 billion in 2013.