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Plastics supply: Falling prices and demand cause Sabic, Ineos, others to cut capacity

How quickly an industry can change. Though in some regions the benefits were not as great as in others, on a macro level plastics processors have had at least two very good years, at least with regard to demand (profits may be another issue-Ed.). But now processors’ demand is slowing, and quickly, and as a result some of the resin price increases of the last years are being pared back.

How quickly an industry can change. Though in some regions the benefits were not as great as in others, on a macro level plastics processors have had at least two very good years, at least with regard to demand (profits may be another issue-Ed.). But now processors’ demand is slowing, and quickly, and as a result some of the resin price increases of the last years are being pared back. More on those falling prices in the TPE resin pricing article and in the Polymerupdate global resin pricing update below.

In addition, some suppliers are taking capacity out of the market in an attempt to match their output to current market demand. For instance, engineering plastics supplier Sabic Innovative Plastics (Pittsfield, MA), the former GE Plastics acquired last summer by Saudi Basic Industries Corp., has cut production across its engineering thermoplastics portfolio by up to 20% as its reaction to a drop in demand “caused by the global economic slowdown.” Sabic IP’s largest end-use industry is automotive. Also, polyolefins supplier Ineos Olefins & Polymers USA (League City, TX) announce restructuring of its U.S. assets, specifically plans “to strengthen its competitiveness in its U.S. polypropylene assets” by taking about 520 million lbs of PP/yr capacity out of the market. Ineos will close two polypropylene plants in La Porte, TX by early 2009.   

In other U.S. production news, Flint Hills Resources said it will permanently stop PP production at its Odessa, TX site. The plant is expected to be shut during the first half of 2009. Also, one of the PP trains at the Phillips-Sumika site in Pasadena, Texas will be shut down at the end of 2008.

Earlier this year, LyondellBasell shuttered PP production at its Canadian facility in Sarnia, Ontario and also at its US facility in Morris, Illinois. Outside North America, Formosa recently said it has shut two of its PP plants with a combined capacity of 950 kt/annum. Reliance Industries has shutdown its PP plant in Jamnagar, India.     

TAGS: Materials
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