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November 08, 2021 02:58 PM

Trinseo's styrenics sale 'not a surprise' amid stale PS market

Frank Esposito
Senior Staff Reporter
Plastics News Staff
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    Trinseo SE has placed a for sale sign on its styrenics businesses, including a major polystyrene resin operation.

    In a Nov. 5 news release, officials with Trinseo in Berwyn, Pa., said that the firm "has begun work to explore" selling those businesses and plans to launch a formal sales process in the first quarter of 2022.

    The planned sale would include Trinseo's feedstocks and polystyrene reporting segments, as well as its 50 percent ownership of North American PS maker Americas Styrenics LLC.

    Market analyst Phil Karig said that Trinseo's decision to sell its styrenics units is "not a surprise at all."

    "Polystyrene in particular has seen no new capacity expansions for years in North America due to cost and performance disadvantages vs. a number of other polymers, as well as low rates of profitability," added Karig, managing director of Mathelin Bay Associates in St. Louis.

    In addition, he said, PS is one of the least recycled resins, with recycling rates much lower than PET and high density polyethylene.

    "With the continuing emphasis on sustainability and circular economy, polystyrene is just not well positioned to be seen as a green resin," Karig added. "As a result, Trinseo could kill two birds with one stone by shifting their investments to higher value-added and more environmentally friendly areas."

    In the release, Trinseo CEO Frank Bozich said the company "will continue to prioritize investments in higher growth, higher margin and lower earnings volatility areas…with an ongoing focus on sustainability."

    If Trinseo sells polystyrene and feedstocks, its remaining business units would be latex binders, engneered materials (including acrylic sheet and resins) and base plastics (including ABS and polycarbonate).

    In 2020, Trinseo's PS unit posted sales of $688.9 million, down 14 percent vs. 2019. Feedstocks sales — including styrene monomer — were down 47 percent to $136.8 million. Both businesses were negatively impacted by the COVID-19 pandemic, but have recovered in 2021. Sales at the PS unit were up 64 percent in the third quarter, with sales in feedstocks up 42 percent.

    Americas Styrenics — based in The Woodlands, Texas — is a joint venture between Triseo and Chevron Phillips Chemical Co. The firm is one of North America's largest PS makers.

    Americas Styrenics doesn't report annual sales, but the firm's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2020 was $52 million, down 44 percent vs. 2019. Its third-quarter adjusted EBITDA of $17 million was down 5.5 percent vs. the same quarter in 2020.

    Plans for Trinseo's styrenics sale come four months after the firm acquired acrylic sheet maker Aristech Surfaces LLC for $445 million. Trinseo bought Aristech from investment firm Falcon Private Holdings LLC.

    The Aristech acquisition was Trinseo's second major acrylic sheet deal in less than a year. In December, the firm bought the acrylic business of Arkema SA for almost $1.4 billion. That Arkema deal included the Plexiglas brand in the Americas.

    Trinseo also made a major divestment in May when it sold its synthetic rubber business to Poland's Synthos SA in a deal valued at $491 million.

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