Sunoco Inc. is closing its 400 million-pound-capacity polypropylene plant in Bayport, Texas, by April 30.
Officials with Philadelphia-based Sunoco said the closing will be permanent. An employee count was not provided in a Jan. 13 news release. Sunoco will continue to make PP at plants in La Porte, Texas; Neal, W. Va.; and Marcus Hook, Pa.
``The decision to close the facility was made after an extensive review which demonstrated that the plant is no longer financially viable,'' Sunoco Chemicals Vice President Bruce Rubin said in the release. Sunoco will take an after-tax charge of about $35 million in the fourth quarter of 2008 as a result of the closing.
The announcement comes about a month after Sunoco Chief Executive Officer Lynn Laverty Eisenhans said the firm is seeking a buyer for its chemicals unit, including its PP business. The remaining PP plants have annual capacity of about 1.6 billion pounds. Sunoco also produces benzene, a key plastic feedstock. at plants in Eagle Point, N.J.; Toledo, Ohio; Sarnia, Ontario; Philadelphia and Marcus Hook.
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.
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 equates to about 15 percent of the region's overall PP-making ability.
Prior to the Bayport closing, Sunoco ranked as North America's fifth-largest PP maker with about 10 percent market share, based on estimated 2008 sales.
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 selling prices for PP in North America shot up 30 percent in the first half of 2008, but since peaking in July have tumbled 55 percent, as crude oil feedstock prices and global demand levels have been rocked.