First Nova and Ineos, now Dow and Chevron form styrenics JV

The Dow Chemical Co. (Midland, MI) and Chevron Phillips Chemical Co. LP (The Woodlands, TX) have signed a non-binding Memorandum of Understanding relating to the formation of a 50:50 joint venture involving their polystyrene (PS) and styrene monomer businesses in the Americas. Assuming regulatory approval, the venture would officially form in the second half of 2007. Many styrenics suppliers have been lambasted by high styrene monomer costs, driven by unstable but generally higher costs for benzene; this JV is intended “to establish the competitive model for an integrated producer of polystyrene in the Americas,” according to a statement from the two suppliers.

Dow would contribute a styrene monomer plant (Camacari, Brazil) and six PS plants (Gales Ferry, CT; Ironton, OH; Joliet, IL; Torrance, CA; Cartagena, Colombia; and Guaruja, Brazil). Chevron Phillips Chemical intends to contribute a styrene monomer plant (St. James, LA) and a PS plant (Marietta, OH).

“This joint venture is an important step for our company in recognizing the changing competitive landscape for styrenics in the Americas,” said Ray Wilcox, president and chief executive officer of Chevron Phillips Chemical. “This is a very competitive business and we look forward to achieving the synergies of this venture so as to expand our opportunities in the Americas and more efficiently meet customer demand.”

The Dow/Chevron announcement follows by less than two weeks the news that Nova Chemicals Corp. and Ineos have announced that they will combine their styrenics assets in the U.S. as part of a 50:50 joint venture, thereby extending the companies’ European joint venture to North America. The North American deal includes Ineos’s styrene and polystyrene plants and Nova’s Styrenix business, and other styrenics polymer assets. The transaction is expected to close in the third quarter of 2007, creating a business with $3.5 billion in annual sales. Ineos will retain full ownership of its European styrene business, including a manufacturing plant in Marl, Germany.

Ineos joined with the European division of Nova in 2006, with the partners acquiring the U.S. and Canadian PS businesses of BASF (see MPW September 2006 Material Thoughts for initial report).—[email protected]