December 20, 2022
Global materials supplier Trinseo announced yesterday that it is shuttering its styrene production facility in Boehlen, Germany, and shutting down a polycarbonate (PC) production line in Stade, Germany. It also said that it would consolidate PMMA sheet manufacturing in Matamoros, Mexico, at the Aristech Surfaces production line in Florence, KY, and reduce styrene-butadiene (SB) latex capacity at its site in Hamina, Finland.
The so-called asset restructuring initiatives are expected to improve profitability by approximately $60 million, compared with the Q4 run rate, most of which will be realized in 2023, said Trinseo.
Competitive shortcomings of the operations in Germany were cited as a primary reason for the closures. The size and capacity of the styrene production plant was insufficient to compete on the global market, said Trinseo, adding that elevated natural gas prices in Europe were also a factor. The PC line is being shut down for similar reasons, as well as to reduce exposure to the cyclical “merchant polycarbonate market.” Trinseo said it will continue to produce PC on the remaining lines for use in its downstream compounding business. Overcapacity of SB latex in the European market prompted the decision to scale back production in Finland.
Trinseo expects to incur $79 million to $89 million of pre-tax, non-recurring charges by ending manufacturing activities at these facilities, $55 million to $61 million of which is expected to hit the fourth quarter of 2022, with the remainder expected to be incurred through 2024. The cash amount of these charges is expected to be $67 million to $77 million. The timing and costs may differ, perhaps substantially, from current estimates, cautioned Trinseo. The charges are subject to ongoing negotiations with works councils, industrial associations, and government authorities.
Trinseo pays €32.6 million EU fine
In the announcement, Trinseo also noted that it has settled a €32.6 million fine imposed by the European Commission (EC) for “participating in a cartel concerning purchases on the styrene monomer merchant market,” as stated on the EC website. The fine was paid in full in December 2022, said Trinseo.
Six companies were involved in the cartel — Ineos, Sunpor, Synbra, Synthomer, Synthos, and Trinseo — and were fined a total of €157 million, save for Ineos, which revealed the existence of the cartel to the EC and, therefore, was absolved of a financial penalty.
According to the Commission, the six companies — all buyers of styrene monomer — exchanged sensitive commercial information and coordinated strategies ahead of monthly meetings that set the industry reference price of styrene. They colluded to adjust the price of styrene to their advantage, thus distorting the competitive process, which is prohibited by EU competition rules.
The EC began investigating the practice in September 2017 after Ineos revealed the cartel’s existence. The investigation showed the “existence of a single and continuous infringement of the European Economic Area, spanning from 1 May, 2012, to 30 June, 2018,” according to a press release on the EC website.
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