LyondellBasell Industries is closing a polypropylene resin unit in Italy in a move that will remove more than a half billion pounds of annual production capacity from the market.
In a Sept. 5 news release, officials with LBI in Houston said that the firm had started consultations with territorial trade unions for the intended closing of one of its two PP production units in Brindisi, Italy.
"After thorough analysis, we believe that closure of this unit is the most sustainable solution from a strategic and financial standpoint," said Jim Guilfoyle, olefins and polyolefins senior vice president.
"We understand the intended closure may impact some of our employees," he added. "We are committed to discuss solutions with unions and social parties to support them in the best way possible. The supply to our customers will continue."
According to Guilfoyle, the Brindisi unit is the oldest of its kind in the world and has become uncompetitive.
"The market environment for our [PP] products of this Brindisi unit has become increasingly challenging, and the outlook provides little improvement," he added. "The intention of our group is to strengthen the position of the company's other assets in higher value markets."
PP resins made in Brindisi are used in textiles, food packaging and other applications. No other details were included in the release.
A company spokesman told Plastics News that LyondellBasell will run the affected plant through the end of the year. He added that the plant employs 47 and that the firm "works with national and provincial unions, as well as our works council, on a plan to offer [employees] a choice for the next step in their career."
An article from consulting firm S&P Global said that LBI operates two separate PP units in Brindisi, one with annual capacity of about 570 million pounds and one with annual capacity of about 520 million pounds. The article added that the 570 million-pound capacity unit is the older of the two, having been in operation since 1982.
Word of the Italian PP closing continues a challenging year for LBI. The firm saw sizable drops in sales and profit in the second quarter of 2023.
Sales for the quarter were down 30 percent to $10.3 billion vs. the same quarter in 2022 as profit slid 55 percent to $715 million. Officials said in early August that global olefins and polyolefins margins improved modestly during the second quarter, driven by lower feedstock costs in both the U.S. and Europe.
Looking to the third quarter, officials said LBI "expects typical benefits from summer seasonality to be more than offset by soft demand due to ongoing economic uncertainty." CEO Peter Vanacker added that LBI "is steadfast in our resolve to advance on the three pillars of our long-term strategy despite near-term macro challenges."
In June, LBI announced the closing of a 64-employee color concentrates plant in Akron, Ohio. Production from the site will be moved to a plant in San Luis Potosi, Mexico. The plant was part of LBI's Advanced Polymer Solutions unit.
LBI also has made two sustainability-focused deals this year. In March, the firm acquired Italian compounder Mepol srl for an undisclosed price. Mepol, based in Riese Pio X, Italy, makes recycled, high-performing technical compounds at plants in Italy and Poland.
Then in April, LBI acquired full ownership of recycling plants in the Netherlands and Belgium. The firm had owned half of Quality Circular Polymers BV in a 50-50 joint venture with Veolia Environment SA of France. The QCP mechanical recycling plants make blends using household plastic waste.
On Wall Street, LBI's per-share stock price was up more than 1 percent to almost $100 in late trading Sept. 6. The price has increased almost 20 percent since Jan. 1.