Sunoco Inc. is seeking a buyer for its chemicals unit, including its polypropylene business.
Chief Executive Officer Lynn Laverty Eisenhans announced the move during a Dec. 15 conference call with stock analysts. Philadelphia-based Sunoco operates more than 2 billion pounds of annual PP capacity at plants in Marcus Hook, Pa.; Neal, W.Va.; and La Porte and Bayport, Texas.
Sunoco also produces benzene — a key plastic feedstock — at plants in Philadelphia and Marcus Hook, as well as Eagle Point, N.J.; Toledo, Ohio; and Sarnia, Ontario.
PP accounted for about 47 percent of Sunoco's chemical output, in pounds, in the first nine months of 2008; although, the firm's overall PP production fell 5 percent to less than 1.7 billion pounds during that time. Sales data for the chemical unit was unavailable. Sunoco's nine-month sales total climbed 43 percent to $45 billion, but profit fell 36 percent to $572 million.
Sunoco spokesman Tom Golembeski said the firm ``is actively pursuing a sale.'' But, he added that ``execution of any transaction depends on our ability to get reasonable value for our assets.''
Sunoco entered the PP market in late 2000 when it bought Aristech Chemical Corp. from Tokyo-based Mitsubishi Corp. for $695 million.
In late 2001, former CEO Jack Drosdick described the Aristech deal as ``the biggest single thing Sunoco's done to grow the company in the last decade.'' The firm later acquired the Marcus Hook plant from Epsilon Products Co.
The North American PP market expanded rapidly in the late 1990s and early 2000s, but more recently has been contracting. Ineos Group and Flint Hills Resources LLC have closed PP capacity this year, adding to a total of more than 2 billion pounds of PP capacity that has exited North America since January 2007. That amount equals about 15 percent of the region's overall PP-making ability.
Based on estimated 2008 sales, Sunoco ranks as North America's fifth-largest PP maker with a market share estimated at 10 percent.
U.S./Canadian PP sales were down almost 11 percent in the first nine months of 2008, according to the American Chemistry Council in Arlington, Va. That includes a drop of 8 percent in domestic sales, and a 34 percent plunge in export sales.
Average per-pound PP selling prices in North America shot up 30 percent in the first half of 2008, but since peaking in July have tumbled 45 percent, as both the price of crude oil feedstock and levels of global demand have been rocked.