Germany's Styrolution GmbH and Braskem SA decided to suspend plans to build a ABS plant in Brazil, due to an adverse market environment and Brazil's economic recession, Styrolution announced recently.
The companies had signed a memorandum of understanding in October 2013 to evaluate the formation of a joint venture to build and operate a plant to produce specialty styrenics, ABS and styrene acrylonitrile (SAN) copolymers for clients in South America.
“Styrolution was very pleased with the trustful and excellent partnership with Braskem to explore the opportunities of the joint venture,” said Styrolution's CEO Kevin McQuade, in a news release posted on Oct. 23. “Sadly, the rapid deterioration of the business climate in the region has significantly increased market and project execution risk.”
Plans for the joint venture could be revisited in the future, once market conditions and the demand outlook turn favorable. McQuade said Frankfurt, Germany-based Styrolution remain committed to South America as one of the company's target regions to expand and grow the specialty styrenics business.
“We will keep working hard to remain the preferred partner of our customers in South America and provide them with excellent styrenics products and solutions out of our plants in North America and Europe,” McQuade said.
A Braskem spokeswoman confirmed the suspension of the project but declined further comment. Braskem is based in São Paulo, and makes polyethylene, polypropylene and PVC resins.
In 2013, when the companies announced plans for a potential 100-ton-per-year ABS plant, Brazil was experiencing strong growth in household appliance and automotive sales, which are some of the most important consumers of specialty styrenics. Since then, Brazil's economy has fallen into a recession, which has resulted in reduced resin production and consumption.
