In a cost-cutting move, Nova Chemicals Corp. is eliminating portions of its solid polystyrene capacity in Chesapeake, Va., and Breda, the Netherlands.
Pittsburgh-based Nova also announced plans to add 20 million pounds of capacity for its Dylark-brand specialty styrenic resin and to double capacity for its Arcel-brand PS/polyethylene interpolymer by early 2003. Both high-end products are made at Nova's plant in Monaca, Pa.
The capacity reductions will affect suspension-based production, a method that Nova styrenics business President Chris Pappas described as the firm's ``least-efficient, highest-cost and oldest [PS] technology.'' Nova will continue to operate mass-based solid PS production at both sites.
The moves will eliminate 100 million pounds of annual capacity and 14 jobs in Chesapeake, and 75 million pounds of capacity and 23 jobs in Breda.
Pappas expects tightness to continue in styrene monomer, which has helped drive up PS prices this year. Global styrene momomer operating rates are above 92 percent, a cutoff that Pappas said usually signals ``a big spike'' in costs for both monomer and derivatives such as solid and expandable PS.
``The styrene market should be very tight by the middle or end of 2003 and could stay that way through 2005 and into 2006,'' Pappas said. ``Additional capacity would need to be under construction today to have an impact in 2005, but we don't think all of the announced project will happen for a number of reasons, including political situations in China and the Middle East.''
Nova's styrenics unit - which runs neck-and-neck with Dow Chemical Co. as North America's largest PS maker - lost $39 million in the first quarter of 2002, when it accounted for about 42 percent of Nova's total sales.