LyondellBasell Industries AF SCA has good news for Texas, but sad news for England.
The global polyolefins giant reversed its earlier decision to close a Texas polyethylene resin plant, but also confirmed plans to close a PE plant in England.
The Texas plant located in Alvin and known as Chocolate Bayou was set to close Sept. 30. But officials with LyondellBasell filed a motion Aug. 31 with the U.S. Bankruptcy Court in New York to withdraw its request to close the plant, which has annual capacity of almost 500 million pounds of high density PE.
We'll continue to operate the plant, LyondellBasell spokesman David Harpole said via phone Sept. 15. Our view of the value of Chocolate Bayou has changed.
Reductions of fixed and variable costs at the plant have improved its competitiveness, and HDPE demand is improving, he said.
Harpole declined to comment on what steps the firm has taken to reduce costs. He also declined to give specifics on HDPE demand improvement.
In May, LyondellBasell based in Rotterdam, the Netherlands, with U.S. headquarters in Houston announced that the Alvin plant would be closed and demolished. The site employs 50 and is one of the firm's oldest plants, opened by USI Inc. in the 1970s.
At the time the closing announcement was made, LyondellBasell officials said the firm made the move because of low profit margins, excess capacity and declining U.S. PE demand.
Ineos Olefins & Polymers USA Inc. entered the picture in July, offering $1 million in cash to buy the Alvin plant. Officials with Houston-based Ineos said their firm had an option to buy the plant, based on a 1988 agreement between predecessor companies of both firms.
Harpole said the Ineos offer had no impact on LyondellBasell's decision.
In England, LyondellBasell announced Sept. 15 that it will close a low density PE plant located in Carrington by the end of this year.
Taking into account the current market environment and our future projections, we've concluded that the plant is no longer economically viable, said Tassilo Bader, LyondellBasell senior vice president for olefins and polyethylene.
We are able to meet projected customer demand for LDPE with product supplies from our other LDPE facilities.
LyondellBasell will focus its LDPE production activities in Europe at Wesseling, Germany, and at the company's world-scale plant located in Berre, France.
Market conditions require economies of scale and low conversion costs, Bader said. With more than [660 million pounds] of capacity, our Berre plant represents a dramatic step change in the production of LDPE, with superior investment and operational economics.
With a capacity of 408 million pounds per year, the Carrington plant is one of the company's smallest LDPE manufacturing sites. LyondellBasell has begun consultations with trade union and employee representatives to discuss what happens to the facility's 50 employees.
The 463 million-pound-per-year polypropylene plant located at the Carrington site is not affected by the move.
LyondellBasell's U.S. operations and one of its European holding companies filed for Chapter 11 bankruptcy protection in January, citing drastic drops in demand for plastics and chemicals. The firm has a $23 billion debt load connected to Basell NV's $19 billion purchase of Lyondell Chemical Co. in late 2007.
Anthony Clark, online editor of Plastics & Rubber Weekly, contributed to this report.
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