Early December has been a tumultuous time for styrenics at Dow Chemical Co.
Officials with the Midland, Mich.-based firm said Dec. 4 that Dow is making major changes to its ABS resin business, exiting all markets but automotive and converting two of its three ABS sites to polystyrene production.
That revelation was followed Dec. 6 by news that Dow and Chevron Phillips Chemical Co. LLC of Houston had chosen the name Americas Styrenics for their proposed styrenics joint venture. The venture's management team also was unveiled.
In ABS, Dow will exit all nonautomotive markets by Feb. 1, officials said in a Dec. 4 news release. ABS production in Ironton, Ohio, and Gales Ferry, Conn., will be converted to PS and will be included in the Chevron Phillips venture.
The move also affects Dow's sales of styrene acrylonitrile, although Dow's ABS and SAN assets in Europe are not affected.
After those moves, Dow's only North American ABS production site will be in Midland, where the firm has about 90 million pounds of annual capacity.
``This decision has been made after a thoughtful and prudent assessment that clearly indicated the fundamentals of the market do not support our continued involvement,'' engineering plastics business director Mark Remmert said in the release.
The move leaves Sabic Innovative Plastics and Lanxess Corp. as the only two major suppliers of ABS in the United States and Canada.
The conversion of ABS lines in Ironton and Gales Ferry is being done to offset the loss of PS production in Midland, where a 275 million-pound-per-year high-impact PS line will stop production sometime in 2008, according to Dow PS product director Jeff Denton. The Midland PS line is not being included in the Dow-Chevron Phillips venture.
The ABS market has been hurt in recent years by competition from polypropylene and other lower-priced resins. More recently, ABS has been affected by higher prices for benzene, a feedstock used to make ABS component styrene monomer.
U.S./Canadian ABS production was near 1.5 billion pounds in 1996, but slipped beneath 1.3 billion pounds by 2005, according to the American Chemistry Council in Arlington, Va. It remained just under the 1.3 billion-pound mark in 2006. Regional ABS sales were up 2 percent in 2006 after falling 9 percent the previous year.
Transportation was the single-largest end market for ABS and SAN every year from 2002-05 until it slipped to second place in 2006, according to ACC. The transportation sector's share of the ABS/SAN market was just under 21 percent in 2006 - a drop of almost 5 percent from its 2002 level. Lower automotive production played a large role in the decline.
Transportation's share of Dow's ABS sales was higher than the industry average, according to North American engineering plastics product director Federico Montaner. He declined to offer exact percentages, but said the mass-type, low-gloss ABS made by Dow is ``perfect for automotive'' - more so than other suppliers' emulsion-type ABS.
The ABS announcement was made on the same day that Dow announced it will cut 1,000 jobs and will close several plants worldwide in an attempt to improve the firm's financial performance. A styrene monomer plant in Cama‡ari, Brazil, is among the plants being closed.
The new Americas Styrenics venture will employ 600 at a styrene monomer plant in St. James, La., a headquarters in Houston and six PS plants in Ironton; Gales Ferry; Joliet, Ill.; Torrance, Calif.; Marietta, Ohio; Guaruja, Brazil; and Cartagena, Colombia. Tim Roberts - currently styrenics general manager for Houston-based Chevron Phillips - will serve as president and chief executive officer of the new 50-50 venture, which is expected to begin operations in the first quarter of 2008.
Other Americas Styrenics executives will include:
* Chief Financial Officer Thomas Egolf, currently finance director for Dow Technology Licensing.
* Commercial Vice President Scot Mitchell, currently global PS manager for Chevron Phillips.
* Vice President of Operations Peter Ott, currently vice president of manufacturing for MEGlobal, a joint venture between Dow and Petrochemical Industries Co. of Safat, Kuwait.
* Randy Pogue, vice president of supply chain, purchasing and information technology, currently global supply chain manager for Dow's aromatics and derivatives units.
* Doug Chauveaux, vice president of human resources and public affairs, currently a human resources business partner at Chevron Phillips.
Denton, Dow's current PS product director, will transition to a new job with Dow's basic plastics unit.
No annual sales or production estimate was available for Americas Styrenics. Based on estimated 2007 sales, the joint venture ranks second in the North American market with a 29 percent share, trailing only the recently formed Ineos Nova venture at 35 percent.
Tumbling profitability - tied into higher costs for benzene and other feedstocks - has led to the formation of both the Ineos Nova and Americas Styrenics joint ventures this year. Those conditions also have led to the announced closing of almost 1 billion pounds of North American PS capacity since early 2006.