To improve operating rates and profitability in the styrene monomer market, the Ineos Nova styrenics joint venture essentially has paid $60 million to remove 1.7 billion pounds of annual capacity for the material.
The Joliet-based JV paid that price to Sterling Chemicals Inc. for exclusive rights to material from Sterling's styrene plant in Texas City, Texas. The JV has no plans to use that material, and Houston-based Sterling is expected to close the plant as a result, according to Greg Wilkinson, a spokesman with Pittsburgh-based Nova Chemicals Corp.
The plant represented about 11 percent of North American supply and 3 percent of global supply, but officials said it may have been operating at as little as 50 percent of capacity in recent years. Nova will increase capacity at its styrene plants in Bayport, Texas, and Sarnia, Ontario - as well as at its own Texas City plant - to make up for the material that had been made at the Sterling plant.
The agreement ``will allow [the joint venture] to rapidly reduce costs and optimize production,'' Nova President and Chief Executive Officer Jeff Lipton said in a news release.
``We believe this is a very significant step that will accelerate a return to financial health for the styrenics chain.''
Nova's Wilkinson added that the deal will reduce Nova's production costs by adding volume to its own plants, which will reduce its per-unit production costs and lower its energy costs.
Removing the Sterling capacity is expected to increase North American styrene operating rates from 82 percent to 93 percent, and global operating rates from 88 percent to 91 percent, according to Nova officials.
Nova formed the North American joint venture with Ineos Group of Lyndhurst, England, in March.
The venture, with annual sales of about $3.5 billion, has North American PS works in Joliet; Decatur, Ala.; Springfield, Mass.; Belpre, Ohio; and Montreal.
In Europe, it manufactures solid PS at sites in Breda, the Netherlands; Marl, Germany; Trelleborg, Sweden; and Wingles, France.
The Ineos Nova joint venture also produces expandable PS in Breda, Marl, Wingles and Ribecourt, France.