Profitability woes are leading polyethylene maker Equistar Chemicals LP to close a 300 million-pound-per-year, high density PE line in Port Arthur, Texas, at the end of March.
``The current level of profitability in the polyethylene industry and our flexibility to more effectively utilize other existing assets ... have resulted in this decision,'' Equistar's Norman Phillips said in a news release. Phillips is senior vice president of polymers for Houston-based Equistar, which is North America's largest PE maker.
The gas-phase HDPE line opened in 1988. Most of its output was sold into injection molding markets such as pails, trash bins and ice trays. The line was owned by Millennium Chemicals Inc. until that company merged with Lyondell Chemical Co. to create Equistar in late 1997.
Products produced by the line will be transferred to Equistar HDPE plants in Matagorda, Victoria and La Porte, Texas.
Equistar still will operate a 240 million pound-per-year HDPE line and 160 million pound-per-year LDPE line in Port Arthur, but jobs will be cut from 200 to 125. The line can be restarted when market conditions improve, Phillips said.
The decision to close the Port Arthur line won't affect the company's planned addition of 480 million pounds of HDPE in Matagorda later this year, according to Equistar spokesman David Harpole. The company already boosted HDPE capacity at Victoria by 125 million pounds earlier this month.
``The shutdown actually ties in nicely with the Matagorda expansion,'' Harpole said by telephone. ``In the current market environment, the profitability at Port Arthur was not acceptable to the organization.''
PE prices dropped 12 cents per pound in 1998 as overcapacity and decreased Asian exports rocked the industry. Producers are currently attempting to increase prices 3-5 cents per pound.
Equistar leads North America with about 20 percent of the HDPE market and almost 18 percent of the LDPE market. In LLDPE, Equistar ranks fifth with a market share of more than 8 percent.